“Participants noted that, because monetary policy worked importantly through financial markets, an unwarranted easing in financial conditions, especially if driven by a misperception by the public of the committee’s reaction function, would complicate the committee’s effort to restore price stability,” according to minutes of the Federal Open Market Committee’s Dec. 13-14 meeting released in Washington on Wednesday.U.S.
The Fed’s move last month extended its most aggressive tightening cycle since the 1980s. Starting from near zero in March, officials lifted their benchmark lending rate through successive meetings to a target range of 4.25 per cent to 4.5 per cent, the highest since 2007.
Quarterly economic estimates updated by Fed officials last month showed rates rising to 5.1 per cent this year, according to their median projection, up from 4.6 per cent in the prior round of forecasts in September.