FOMC Minutes, inflation outlook tilted to the upside

Fed Officials Discussed Slowing Interest Rate Increases ‘Soon’

The central bankers discussed the need to slow rate increases soon at their last meeting, while signaling that they are likely to raise borrowing costs higher.
Jeanna Smialek

By Jeanna Smialek, The New York Times, Nov. 23, 2022

Federal Reserve officials agreed at their November meeting that it would soon be appropriate to slow interest rate increases, minutes from the gathering showed, as they shifted their emphasis toward how high interest rates will eventually rise.

Central bankers lifted interest rates by three-quarters of a percentage point for a fourth straight time at their Nov. 1-2 meeting, bringing the federal funds rate to nearly 4 percent…

Whatever the pace, Fed officials emphasized in November that it is the destination that is most important. Officials have suggested they are likely to raise rates higher than they had anticipated as recently as September as the economy proves fairly resilient, with several suggesting that rates could climb to 5 percent or higher…

“Many participants observed that price pressures had increased in the services sector and that, historically, price pressures in this sector had been more persistent than those in the goods sector,” the minutes noted, later adding that “risks to the inflation outlook remained tilted to the upside.” [end quote]

The actual minutes are a PDF file available at the FOMC web site.

When the FOMC says that “risks to the inflation outlook remained tilted to the upside” they are saying that they will not cut the fed funds rate anytime soon. The upward surge in the stock market is based on traders’ hopes that a small drop in inflation presages a cut.

Nope. Non. Nyet. Says the Fed.


That “reduced rate of rate increases” narrative has been promoted to keep the market floating for over a month. Apparently, “the wise” will keep pumping that narrative until it happens, eventually.

Meanwhile, I have not heard anything that would forestall a rail strike December 5th.



I’d advise not only locking at the FF rate but looking out the yield curve.

The two risk premiums on the 10y US treasury got soft. The lower yield helps equity values.

I am willing to say the larger investment houses modeled out slightly softer inflation numbers in Oct for Nov. The major investment houses model these things. They may have also read FED reports not just the notes that pointed to the November results.

The market started rising.

Following oil for a softening of inflation we can go back many months.

Bond yields have a factor for inflation risk. Bond yields also have a factor for market risk. The market risk short term has come off.

Medium term the FED and Treasury expect crisis in the global bond markets. Or more specifically in the US bond market.