The US Federal Reserve is set to reveal the minutes of the Federal Open Market Committee’s November meeting on Thursday 12:30 AM, which will show how divided the policymakers were while deciding on the hike in interest rates. The meeting minutes will also provide some clarity on the path and pace of the rising repo rates, and if the FOMC will cool down on the aggressive rate hikes, experts said. The US Fed, after the FOMC meet on November 2, 2022, hiked the rate by 75 basis points in efforts to tame decades-high inflation in the country. The total rate hike in the current year is at 375 bps.
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Tanvi Kanchan, Head – Corporate Strategy, Anand Rathi Shares and Stock Brokers, said, “The minutes are expected to give further clarity on the pace of hike as Powell had clearly signalled that the aggression of the hikes would not cool down till inflation data showed direct effect. The inflation for the month of October came at 7.7 per cent in comparison to 8.2 per cent in the previous month, much lower than the street estimates. However, one thing that the Fed has been clear about is that the slower rate hikes does not imply a lower federal rate, and one CPI report, which came in better than expected, would not alter the course of the monetary policy.”
The US inflation for October came in as a curveball with sharper ease off than expected. But at 7.7 per cent the rate is still pretty elevated, which implies that the rate hikes are still far from halting. The aggressive nature, however, is still debatable. Ravindra Rao, VP-Head Commodity Research, Kotak Securities Ltd, said, “We expect the minutes of the November meeting might reveal a consensus between the policymakers on a smaller rate hike as there are concerns of economic slowdown due to Fed’s aggressive stance. This was also indicated in some of the fed officials’ recent statements. However, the policy makers might be divided on ending the rate hike anytime soon.”
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The US Fed officials will update their projections of the inflation rate and announce a rate hike at their next meeting scheduled on December 13-14. It is expected that the rate hike to be announced next month will be less aggressive than 75 bps. Sujan Hajra, Chief Economist, Anand Rathi Securities, said, “one can be certain that the rate hike will be 50 bps or lower,” calling another 75 bps bump highly unlikely.