At that meeting, the Fed officials also expressed uncertainty about how long it might take for their rate hikes to slow the economy enough to tame inflation. Chair Jerome Powell stressed at a news conference after the meeting that the Fed wasn’t even close to declaring victory in its fight to curb high inflation.
Still, some of the policymakers expressed hope that falling commodity prices and the unsnarling of supply chain bottlenecks "should contribute to lower inflation in the medium term.'' Indeed, the government reported earlier this month that price increases moderated in October in a sign that the inflation pressures might be starting to ease. Consumer inflation reached 7.7% from a year earlier and 0.4% from September. The year-over-year increase, though painfully high by any standard, was the smallest rise since January.
Wednesday’s minutes revealed that Fed officials thought that ongoing rate increases would be “essential’’ to keep Americans from expecting inflation to continue indefinitely. When people expect further high inflation, they act in ways that can make those expectations self-fulfilling — by, for example, demanding higher wages and spending vigorously before prices can further accelerate.
The Fed officials noted that most employers were resisting layoffs even as the economy slowed, apparently "keen″ to hold onto workers after a year and a half of severe labor shortages. The U.S. unemployment rate is 3.7%, just above a half-century low.