Federal Reserve officials at their last meeting stressed their commitment to taming “unacceptably high” inflation before announcing that they were raising their benchmark interest rate by a substantial three-quarters of a point for a third straight time and signalling more large rate hikes ahead.
In minutes from their Sept. 20–21 meeting released Wednesday, the Fed policy-makers judged that a “softening of the labour market” — likely including higher unemployment — would be needed to curb the nation’s inflationary pressures. They noted that hiring remained “robust,” which itself fuels high inflation as wages rise sharply.
The minutes show that the policy-makers expressed concern during their meeting that the U.S. economy might be vulnerable to damage from a sputtering Chinese economy and a slowdown in Europe arising from Russia’s war against Ukraine.
Beginning in March this year, the Fed has raised rates five times in an aggressive pace that has boosted its key short-term rate to a range of 3% to 3.25%, the highest level since 2008. The central bank is set to raise rates again at its meetings in November and December, beginning with another large three-quarter-point hike early next month.
Chair Jerome Powell has warned that wringing high inflation out of the economy will “bring some pain,” with higher unemployment and, many fear, a recession by next year.