The latest meeting minutes released by the U.S. Federal Reserve show that interest rates are likely to continue rising in 2023 as the central bank fights to lower inflation.
The minutes from the December meeting where policymakers raised the Fed’s key interest rate by 50-basis points, or half a percentage point, show that the U.S. central bank remains committed to bringing inflation back down to its 2% target.
Inflation in the U.S. is currently at 7.1%, its highest level in nearly 40 years.
“Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to two percent,” read the Fed meeting minutes.
In 2022, the U.S. Federal Reserve raised the target range for its benchmark federal funds rate to 4.25% – 4.50%, its highest level in 15 years.
Fed officials also said they would focus on data as they move forward and see “the need to retain flexibility and optionality” regarding monetary policy.
In December, Federal Reserve Chair Jerome Powell said that while there has been some progress made in the battle against inflation, he expects to hold interest rates at higher levels even after the central bank stops increasing them.
Markets are currently pricing in a 25-basis point, or quarter of a percentage point, increase in interest rates at the next Federal Reserve meeting on February 1 of this year.