FOMC Minutes: Participants judged a rate increase of 50 or 75bps would likely be appropriate at the July meeting

Policy

• Participants concurred that the inflation outlook had deteriorated, warranting a larger 75bp move.


• Participants concurred that the economic outlook warranted moving to a restrictive stance of policy, and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.


• Participants stressed the need to adjust the stance of policy in response to incoming information regarding the evolution of these and other factors.


• Members judged that, with high and widespread inflation pressures and some measures of longer-term inflation expectations moving up somewhat, it would be appropriate for the post-meeting statement to note that the Committee was strongly committed to returning inflation to its 2% target.

Economy

• Participants judged there was a significant risk higher inflation could become entrenched if the public questions the Fed's resolve.


• Participants saw little evidence to date of a substantial improvement in supply constraints, and some of them judged that the economic effects of these constraints were likely to persist longer than they had previously anticipated.


• Participants noted that inflation remained much too high and observed that it continued to run well above target.

Risks

• Participants emphasized that they were highly attentive to inflation risks and were closely monitoring developments regarding both inflation and inflation expectations.


• Most agreed that risks to inflation were skewed to the upside and cited several such risks, including those associated with ongoing supply bottlenecks and rising energy and commodity prices.


• Participants judged that uncertainty about economic growth over the next couple of years was elevated. In that context, a couple of them noted that GDP and gross domestic income had been giving conflicting signals recently regarding the pace of economic growth, making it challenging to determine the economy's underlying momentum.


• Most participants assessed that the risks to the outlook for economic growth were skewed to the downside.


• Downside risks included the possibility that a further tightening in financial conditions would have a larger negative effect on economic activity than anticipated as well as the possibilities that the Russian invasion of Ukraine and the COVID-related lockdowns in China would have larger-than-expected effects on economic growth.

via Federal Reserve

Analysis details (19:12)

• Note, that there was no mention of a 100bps discussion within the minutes. 

06 Jul 2022 - 19:00- Fixed IncomeData- Source: Federal Reserve