The minutes from the last Federal Reserve policy meeting of 2023 were released on Wednesday night, with indications that investors would do well not to become overly confident that the central bank will introduce interest rate cuts as early as March this year.
While Fed officials broadly agreed that rates were likely at their peak and that lower rates “would be appropriate by the end of 2024,” there was no discussion of when such rate cuts would begin. Some policymakers argued that rates could even remain at the current peak level for longer than markets anticipate. This comes as inflation continues to hover significantly above the Fed’s 2% target.
New York Fed President John Williams argued that it’s still “premature” to discuss rate cuts as early as March, while Cleveland Fed President Loretta Mester suggested that markets have become too confident about incoming rate cuts. Still, not every Fed official agreed with this stance, with San Francisco Fed president Mary Daly claiming that it was appropriate to discuss rate cuts so long as inflation data continues to show signs of cooling.