According to the Fed's minutes, the bank's planned interest rate cut may be gradual.

The minutes from the last meeting of the Federal Reserve (Fed) revealed that Bank officials assessed that it would be appropriate to gradually lower interest rates if inflation continues to decrease and employment remains strong.

FED MAY SURPRISE

The Fed published the minutes from the Federal Open Market Committee (FOMC) meeting held on November 6-7.

The minutes from the last meeting, where the policy interest rate was reduced by 25 basis points to a range of 4.50-4.75%, showed that officials considered the possibility of pausing interest rate cuts if the progress made in reducing inflation were to falter.

The minutes stated, "While discussing the outlook for monetary policy, officials anticipated that if the data comes in as expected, inflation continues to sustainably decline towards 2%, and the economy remains close to maximum employment, it would be appropriate to gradually move towards a more neutral policy stance over time."

INTEREST RATE DECISION DEPENDS ON MARKET MOMENTUM

The minutes emphasized that monetary policy decisions are not on a predetermined path, but rather depend on the trajectory of the economy and its effects on the economic outlook and risk balance.

The minutes included the assessment that "while discussing how monetary policy should be positioned against potential changes in the risk balance, some participants noted that if inflation remains high, the Committee may pause the easing of the policy interest rate and keep it at a restrictive level, while others indicated that if the labor market turns or economic activity stumbles, the pace of policy easing could be accelerated."

In the Bank's minutes, it was noted that many officials stated that uncertainties regarding the level of the neutral interest rate complicate the assessment of the restrictiveness of monetary policy and make it appropriate to gradually reduce policy restrictions.

The Fed's next meeting will be held on December 17-18.