Fed saw evidence of a slowing economy at its last meeting

Federal Reserve Chair Jerome Powell (File image: Reuters)

Federal Reserve officials saw signs that the U.S. economy was weakening at their last meeting but still called inflation “unacceptably high’’ before raising their benchmark interest rate by a sizable three-quarters of a point in their drive to slow spiking prices.

In minutes from their July 26-27 meeting released Wednesday, the policymakers said they expected the U.S. economy to expand in the second half of 2022. But many of them suggested that growth would weaken as higher rates take hold. The officials noted that the housing market, consumer spending, business investment and factory production had decelerated after having expanded robustly in 2021.

Slower growth, they noted, could “set the stage’’ for inflation to gradually fall to the central bank’s 2% annual goal, though it remained “far above’’ that target.

In both June and July, the Fed sought to curb high inflation by raising its key rate by an unusually large three quarters of a percentage point twice. At their meeting last month, the policymakers said it might “become appropriate at some point to slow the pace of policy rate increases."