Fed Officials Are Worried About the Risks of Doing Too Little on Inflation

Federal Reserve officials committed to raising interest rates to a restrictive level in the near term and holding them there to curb inflation, though several said it would be important to calibrate hikes to mitigate risks.

“Several participants noted that, particularly in the current highly uncertain global economic and financial environment, it would be important to calibrate the pace of further policy tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook,” according to minutes from their Sept. 20-21 gathering released Wednesday in Washington.

During the meeting, US central bankers agreed to boost the benchmark lending rate 75 basis points for the third straight time, lifting it to a target range of 3% to 3.25% as they combat stubborn inflation pressures.

“Many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action,” the minutes showed.

US stocks fluctuated following the release, while Treasury yields remained lower and the dollar was little changed. Traders maintained bets that the Fed will raise rates again next month by 75 basis points.