US Fed policymakers flag possible rate hikes

TDT | Washington

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Many US central bank policymakers cited the possible need for interest rate hikes to counter the risk of sustained inflation from high oil prices, minutes of their recent meeting showed yesterday.

The US Federal Reserve has been battling to bring inflation down to its long-term two percent target since the pandemic.

In March, the Fed chose to extend a pause on interest rate cuts -- after three reductions in late 2025 -- and raised its inflation forecast.

At the meeting, officials flagged one expected cut by the end of the year, and cited an “uncertain” economic outlook due to the war in the Middle East. The US-Israeli war on Iran, launched on February 28, has engulfed the region in violence, with Tehran sending oil prices skyrocketing by virtually closing the vital Strait of Hormuz.

The US Fed has a dual mandate of keeping inflation to its long-term target while ensuring maximum employment.

Minutes of its last meeting, which took place March 17- 18, showed there was concern about the lack of progress in bringing inflation down.

“Some participants noted that the rate of increase in core goods prices remained well above the pace likely to be consistent with the sustainable achievement of the Committee’s inflation objective, at least in part reflecting the effects of tariffs,” the minutes said.