Elevated inflation persisting longer than anticipated: U.S. Fed minutes

A man shops at a grocery store in New York, the United States, Dec. 7, 2021. (Xinhua/Wang Ying)

Most participants noted that, if inflation does not move down as they expect, it would be appropriate for the Committee to remove policy accommodation at a faster pace than they currently anticipate, the minutes said.

WASHINGTON, Feb. 16 (Xinhua) -- U.S. Federal Reserve officials said that recent inflation readings had continued to significantly exceed the central bank's longer-run goal and elevated inflation was persisting longer than they had anticipated, according to the minutes of the Fed's latest policy meeting released Wednesday.

Persistent elevated inflation reflected supply and demand imbalances related to the COVID-19 pandemic and the reopening of the economy, showed the minutes of the Federal Open Market Committee's Jan. 25-26 meeting.

The minutes noted that participants generally expected inflation to moderate over the course of the year as supply and demand imbalances ease and monetary policy accommodation is removed.

After the two-day policy meeting last month, the Fed signaled that it is ready to begin a series of interest-rate hikes in March to combat surging inflation as it exits from the ultra-loose monetary policy enacted at the start of the COVID-19 pandemic.

The latest data released by the U.S. Labor Department last week showed that U.S. consumer prices in January continued to rise at the fastest annual pace in almost 40 years, raising the prospect of a tighter monetary policy by the Federal Reserve.

"With inflation well above 2 percent and a strong labor market, members expected that it would soon be appropriate to raise the target range for the federal funds rate," the Fed minutes said.

Most participants preferred to continue to reduce the Committee's net asset purchases according to the schedule announced in December, bringing them to an end in early March, while a couple of participants stated that they favored ending the Committee's net asset purchases sooner to send an even stronger signal that the Committee was committed to bringing down inflation, according to the minutes.

Most participants noted that, if inflation does not move down as they expect, it would be appropriate for the Committee to remove policy accommodation at a faster pace than they currently anticipate, the minutes added.