Some Fed officials were worried that underlying price pressures may prove more persistent as a tight labor market allows workers to bargain for higher pay, making it harder to reduce inflation further, the Wall Street Journal said.
Two of the meeting participants indicated a preference for holding rates, arguing that doing so would likely lead to further progress toward the Federal Open Market Committee's goals while allowing the Committee time to further evaluate that progress.
Philadelphia Fed President Patrick Harker, a voting member of the central banks rate-setting committee, said last week, "I believe we may be at the point where we can be patient and hold rates steady." Meanwhile, the Financial Times said that economists broadly expect that last months rate increase would have been the final one of the year, even though the central banks officials in June projected the benchmark rate would peak a quarter of a percentage point higher at 5.5-5.75 per cent.
The newspaper said that the Fed chair Jerome Powell stressed last month that the Federal Open Market Committee would digest the totality of the economic data ahead of the next meeting in September, but acknowledged that "given how far weve come, we can afford to be a little patient" when it comes to further rate rises.
It explained that the inflation remains too high for the Feds liking, even as price pressures have eased in recent weeks and are expected to keep receding in the coming months, adding that labor market demand, on the other hand, has further slowed and consumer spending on goods and services has remained strong despite higher borrowing costs than just over a year ago, when the Feds benchmark interest rate hovered near zero.
The Financial Times concluded by saying that "pausing rate rises again in September would give the Fed more time to take stock of how the economy is responding to earlier increases, or whether borrowing costs need to rise further to fully tame inflation." While officials continue to debate the need for additional measures, they appear to be more unified about keeping the benchmark interest rate at a level that restrains demand for an extended period in order to beat inflation.
Source: Qatar News Agency