A June pause in rate hikes would be a close call for Fed officials, minutes of last meeting show

Federal Reserve Board Chair Jerome Powell (AP image)

Federal Reserve officials were divided earlier this month on whether to pause their interest rate hikes at their upcoming meeting in June, according to the minutes of their May 2-3 meeting.

“Several (policymakers) noted if the economy evolved along the lines of their current outlooks, then further policy firming after this meeting may not be necessary” — Fed parlance for a pause — the minutes from the May 2-3 meeting said.

At the same time, “some” officials said that the persistence of high inflation meant that “additional (rate hikes) would likely be warranted at future meetings.”

Yet in the language used in the minutes, “several” is considered to be more than “some,” suggesting that those favoring a pause may have the upper hand.

In addition, Chair Jerome Powell and the officials closest to him signaled in speeches last week that they were likely to support a pause in rate hikes at their next meeting in mid-June.

The Fed raises its key rate to lift the cost of mortgages, auto loans, credit card borrowing, and business loans. By making borrowing more expensive, the Fed seeks to slow growth and inflation. Fed officials have raised their benchmark rate for 10 straight meetings, to about 5.1%, a 16-year high.