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In recently released minutes from the Federal Open Market Committee’s (FOMC) latest meeting, members indicated they would be hesitant to raise rates again, unless economic data indicated insufficient progress in lowering inflation to its 2 percent target.

“The minutes from the October FOMC meeting reaffirm that the committee believes monetary policy is currently restrictive,” said NAFCU Chief Economist and Vice President of Research Curt Long. “Given the significant moderation in inflation in 2023, NAFCU believes the FOMC is done raising rates in this cycle and will proceed with the first rate cut in the first half of 2024.”

According to the minutes, participants noted that real GDP had expanded at an unexpectedly strong pace in the third quarter, boosted by a surge in consumer spending. However, participants judged that aggregate demand and aggregate supply continued to come into better balance, resulting from the current restrictive stance of monetary policy and the continued normalization of aggregate supply conditions.

In their discussion of the household sector, participants observed that the incoming data on consumer spending had again surprised to the upside, likely supported by a strong labor market and by generally solid household balance sheets. Some participants remarked that the finances of some households – especially those in the low- and moderate-income categories – were increasingly coming under pressure amid high prices for food and other essentials as well as tight credit conditions.

Participants stressed that they would need to see more data indicating that inflation pressures were abating to be more confident that inflation was on course to return to 2 percent over time.

The FOMC will next meet Dec. 12-13.