DECEMBER 2, 2024 – FEDERAL RESERVE DISCUSSED SLOWING RATE CUTS
In the release of the minutes of the Fed’s November meeting it was reported officials discussed the possibility of slowing down or pausing interest rate cuts if inflation does continue to drop. The data will have to show inflation is continuing to trend downward if rates are to move to a neutral level.
Officials are confident inflation will return to the 2 percent target, but it may be slower than initially expected. Some participants said the committee could pause its easing of monetary policy if inflation remains elevated, but policy easing could be accelerated if the labor market turns down or economic activity falters. Recent gains in productivity have caused the Fed to revise upward the assessment of the economy’s “potential output”, which would allow for growth from productivity gains without resulting price pressures.
The Fed meets on December 17-18. It is uncertain whether rates will be lowered one last time in 2024.