FOMC meeting minutes: May 3/4 2022

The FOMC agreed at their May meeting that they need to raise interest rates in half-point steps at their next two meetings.

The minutes said, “Most participants judged that 50 basis-point increases in the target range would likely be appropriate at the next couple of meetings. Many participants judged that expediting the removal of policy accommodation would leave the committee well positioned later this year to assess the effects of policy firming and the extent to which economic developments warranted policy adjustments.”

Regarding a decline in quantitative easing, the Fed also said that from June 1, holdings of Treasuries will be allowed to decline by $30 billion a month, rising in increments to $60 billion a month in September, while mortgage-backed securities holdings will shrink by $17.5 billion a month, increasing to $35 billion.

The Fed’s preferred inflation measure, the personal consumption expenditures price index rose 6.6% y/y in March, while the Labor Department’s consumer price index rose 8.3% in April.