– You can proceed carefully – E24

The US central bank is clear about the need to keep interest rates high for some time to come, but believes it has reached a point where it can proceed cautiously.

Three weeks ago, the US central bank, the Federal Reserve, kept interest rates unchanged at 5.25 to 5.50 percent. It was widely expected in advance that interest rates would remain calm at a 22-year high.

The central bank will publish on Wednesday Minutes From this interest rate meeting.

The minutes show that all members of the Fed’s rate-setting committee agreed that you are in a “position where you can proceed with caution” when deciding whether to set further interest rates.

At the same time, all members also agreed that “monetary policy should remain tight” for some time, until it is confirmed that inflation is moving steadily down towards the target.

The US central bank has raised interest rates several degrees over the past two years in an attempt to calm the economy and overcome the sharp increase in prices.

Inflation was on its way down in the United States after peaking last fall. In August, it rose again somewhat to 3.7 percent. But core inflation, which ignores food and energy, fell as expected to 4.3 percent.

The Fed, like many other central banks, aims to keep inflation stable at around 2%.

It expects smaller interest rate cuts next year

The questions surrounding future US interest rate setting are, first, whether the increases are over now, or whether there are likely to be further increases this year. The second question is when and how quickly the interest rate will be cut again.

– There is a lot of uncertainty about when interest rates will be reduced. The forecast for 2024 is just a forecast, nothing more, says Fed Governor Jerome Powell during the press conference after the decision.

Forecasts submitted at the same time as the interest rate decision showed that a majority of Fed committee members expect another rate hike will be needed this year.

These forecasts also showed that two interest rate cuts are expected next year. Previous forecasts called for four cuts.

The market believes that the peak has been reached

Interest rate expectations this week moved in a lower direction on belief that there will be another rate hike.

The market currently places a probability of more than 70 percent that the central bank will not raise interest rates in the upcoming meetings, according to central bank expectations. CME’s Fedwatch tool.

These moves, among others, follow statements by several central bank leaders in recent days, including Deputy Governor Philip Jefferson on Monday.

Jefferson stated, among other things, that the central bank “is in a position to proceed cautiously in assessing whether further tightening is necessary” when it comes to interest rates.

He also noted that government interest rates have increased recently, and this is something that will be taken into account when evaluating the interest rate in the future. The US 10-year bond yield, that is, the yield on US government bonds that mature in ten years, has been creeping steadily higher in recent weeks. But this week, the world’s most important interest rate fell somewhat