Fed officials indicated lower rates would be ‘appropriate’ by the end of 2024: meeting minutes

Federal Reserve officials agreed during their last policy meeting of 2023 that interest rates were likely at their peak and almost all of them predicted lower rates “would be appropriate by the end of 2024,” according to minutes from that meeting released by the central bank on Wednesday.

But there wasn’t a discussion of exactly when those cuts could begin and participants kept the option of higher rates on the table if inflation were to heat up again.

There was also some divergence about exactly how the future could unfold, with several suggesting rates could stay at this peak for “longer than they currently anticipated” and a number of participants warning about the risks to the economy of being restrictive for too long.

Where officials on the Federal Open Market Committee were aligned was that the central bank had made clear progress on cooling inflation, citing a six-month reading of so-called “core” inflation as well as signs that demand and supply were coming into better balance.

Yet meeting participants said inflation was still well above the committee’s longer-run goal and that a risk remained that progress toward price stability would stall as inflation approaches the Fed’s 2% target.

They “reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the committee’s objective,” according to the minutes.

The minutes released Wednesday offer new insight into a closed-doors conversation on December 13 that became the subject of some confusion in recent weeks as Fed officials diverged publicly on the subject of rate cuts in the year ahead.

In a press conference that followed the Fed’s last meeting, Fed Chair Jerome Powell made it clear that central bank officials had started the conversation of when to dial back policy restraints, calling it a “topic of discussion” at the December meeting and “a topic for us looking ahead.”

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