The Federal Reserve recently announced it was skipping another interest rate increase for the first time in 15 months to assess the impact of its efforts to quash inflation.
Apparently, one of the reasons for the pause was disagreement among the 12 members of the Federal Open Markets Committee about what to do next. The hawks—who want to raise rates at least twice more this year—argue that inflation is still above the Fed’s target of 2% to 3%, and that core inflation (sans volatile gas and food prices), remains stubbornly high at 5.3% year-over-year.
Other committee members want to leave things where they stand for now. They point out that consumer prices rose a modest 4% in May from 12 months earlier—the smallest increase in more than two years—and that the full impact of the central bank’s 10 previous rate hikes is still not known.
But despite their differing views on interest rates, both the hawks and the doves on the FOMC think the Fed has the economy heading for a soft landing, in which inflation levels are reduced without sending the economy into a tailspin.
Read more in Forbes.
