Minutes from the Federal Reserve’s meeting concluding February 1 were released last Thursday, February 23. The minutes indicated that nearly all members of the Federal Open Market Committee (FOMC) agreed with February’s quarter-point (0.25%) rate increase. Some would have supported a 50-basis point (0.50%) rate hike to move quicker towards the Fed’s target range.
The meeting minutes suggested another 0.25% hike is likely at their next meeting on March 21-22. However, investors remain anxious that more recent economic data like the strong jobs report on February 3 may prompt a 0.50% hike instead. That jobs report showed unemployment hitting a 53-year low.
The minutes stressed that inflation was still too high. Whether fully in their control or not, FOMC members are still targeting an inflation rate of 2% with their policy decisions. In our view, the 2% goal is lofty when the Fed can only control monetary policy aimed at curbing demand, not other variables like supply constraints of goods and services.
Members diverged about their outlook on the economy, with some members finding the risk of recession elevated. Others feel the Fed may engineer a soft landing or avoid a recession altogether. We will keep watching this space.
Juxtaposed with the current economic landscape, our recommendations are based on your financial goals and objectives. Let us know if we can be helpful or answer any questions.