In super-exciting economics news, Federal Reserve officials were split on if further interest rate hikes would be needed to curb inflation in the United States, according to the minutes of the May meeting released Wednesday and reviewed by Bloomberg. According to the notes, the majority of Fed officials feel current measures to curb inflation are working, but some want to be more aggressive on the timetable for getting to an ideal 2% inflation rate.
“Several participants noted that if the economy evolved along the lines of their current outlooks, then further policy firming after this meeting may not be necessary,” the minutes of the meeting held May 2nd & 3rd note. “Some participants commented that, based on their expectations that progress in returning inflation to 2% could continue to be unacceptably slow, additional policy firming would likely be warranted at future meetings.”
The split in opinion comes largely due to data showing the American economy’s unexpected resilience in a post-pandemic world. Although inflation put pressure on consumers, job creation continued and consumer spending was steady, even if it shows signs of future softness.
Economists are somewhat puzzled by what to do with the job market. Consistently strong jobs numbers are typically desired, particularly as workforce participation rates return to pre-pandemic levels. The US population “finds” about 50,000 new workers each month with people leaving school and entering the workforce or people who left the workforce (to raise children or care for a sick relative, for example) returning to employment. So far this year, however, job creation has averaged around 300,000 per month, putting a strain on employers who are raising wages to attract labor.
During the May meeting of the Federal Open Market Committee, the 18 members opted to raise interest rates by an additional quarter percentage point. The June meeting, scheduled at the beginning of the month, will occur during a potential debt default by the United States if nihilist Republicans in the House have their way and shut down the federal government, an action that will cause havoc for both financial markets and American households.