Federal Reserve officials were cautious with their final policy statement of 2023, leaving the door open to future rate hikes, according to the minutes of the December 2023 meeting.
In the committee's post-meeting statement, one word was modified to reflect how they it to proceed. When it comes to future policy, "the Committee would determine 'the extent of any additional policy firming that may be appropriate to return inflation to 2% over time.'"
The minutes from the December meeting, released Wednesday, say they "generally viewed the addition of the word 'any' to this sentence as appropriately relaying their judgment that the target range for the federal funds rate was likely now at or near its peak for this policy tightening cycle while leaving open the possibility of further increases in the target range if these were warranted by the totality of the incoming data, the evolving outlook, and the balance of risks."
The minutes don't indicate plans to lower the central bank rate, but forecast the board would cut borrowing costs three times in 2024.
The Federal Reserve has maintained the benchmark federal funds rate between 5.25% and 5.5% since July. Last month, officials projected at least three quarter-point rate cuts in the coming year. However, the Fed has struggled to temper market expectations of earlier and deeper cuts due to the faster-than-expected cooling of inflation.
Fed Chairman Jerome Powell's comments regarding rate-cut outlooks following that meeting further fueled market speculation, although some officials later clarified that rate cuts were not a primary focus.
Data during the meeting indicated members are still concerned with some economic conditions. They noted the improvement in both headline and core inflation.
"They observed that progress had been uneven across components, with energy and core goods prices falling or changing little recently, but core services prices still increasing at an elevated pace," the minutes state.
