The Fed still expects the "soft landing" script

The rate of interest rates decreases is also accompanied by high levels of concern that inflation is still a threat.

After the February 1 meeting ended with lower interest rates than most of the increase in the beginning of 2022, officials emphasized that they were concerned about high inflation.

The minutes indicate that inflation is "still higher" by 2% of Fed's goal. That happens to the labor market "still very tight, contributing to continuing to put pressure on wages and prices".

Therefore, the Fed has approved the 25 basic interest rate increase, this is the minimum increase since the first interest rate increase of this tightening cycle in March 2022.

This move has brought the federal fund interest rate on the target range of 4.5% - 4.75%. But the minutes indicate that the rate of interest rates decreases is also accompanied by high levels of concern that inflation is still a threat.

Expectations of a "soft landing"

In a report published on February 24, these researchers found that in more than 16 previous interest raising campaigns since 1950 to curb inflation of central banks in the US, Germany, Germany,, Canada and the UK, there are no cases of inflation significantly reduced without the recession.

After the research report was published, Fed officials voiced their opposition.

"I do not see that we have to trade between labor and price stability," said Loretta Mester, Chairman of the Federal Reserve Bank of Cleveland, one of the 12 regional banks of the Fed, said in the conversation with CNBC .

She argued that the recessions related to the effort to reduce inflation in the past may be the result of central banks tightening the monetary policy more than necessary, not the recession of the economy. What is needed to stabilize the price.

Mester emphasized that Fed officials need to pay attention to the late impact of policy actions in efforts to curb inflation.

Hot data on US personal inflation, published by the US Department of Commerce on February 24, caused observers to ask the Fed question that was slow in the fight against inflation.

The aforementioned research is not the first study to criticize the "Perfect inflation control" strategy of the Fed, that is, stabilizing the price without causing great damage to the economy, which is unrealistic.

However, the US economy so far is still relatively "peaceful" after a series of fast loan costs of Fed last year, pushing the standard overnight interest rate of the Fed from nearly zero to amplitude 4, 5-4.75% currently.

Some parts of the economy, including housing, are heavily affected when credit conditions are tighter, but the unemployment rate has not increased and growth is generally stable.

That makes Fed officials expect the possibility that the US economy can "land soft", which is weakened without falling into a recession with a high unemployment rate.

However, that good resistance of the US economy, along with persistent inflation pressure, raises the question of whether the Fed needs to raise interest rates higher than expected and cause greater losses to the background. Economy or not.

With the labor market also heating up, this shows that the Fed raising interest rates has not impacted the majority of the economy.

Currently, the market is determining the Fed price will raise interest rates 25 basic points in March, then a few more times to bring interest rates to the highest level of 5.25% - 5.5%. If the interest rate reaches the middle of that goal, this will be the highest interest rate since 2001.

Meanwhile, the market is also concerned that if the Fed moves too fast or too far, it can push the economy into a recession. The minutes note that some members are viewing the risk of "increasing". Other officials have publicly said they thought that the Fed could avoid economic recession and achieved "soft landing" for the economy that witnessed a significant growth of growth but not decreased.

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