Fed Minutes reveals desire for more near-term rate hikes and a'restrictive' policy stability

Fed Minutes reveals desire for more near-term rate hikes and a'restrictive' policy stability ...

The Federal Reserve is poised to take its interest hikes, according to minutes from the central bank''s May meeting, which indicated Wednesday that a "restrictive" policy approach might be appropriate.

To respond to the rapid rate increase in over four decades, a declaration might mean the Federal Reserve is able to raise rates beyond the so-called neutral level, which many refer to as a rate of between 2% and 5%. However, many have admitted that two additional rate increases of 50 basis points each -- in June and July -- would be likely the most appropriate route.

"Participants agreed that the economic outlook was highly uncertain and that policy decisions should be data dependent and focused on repurposing inflation to the Committee''s 22% objective while maintaining favorable labor market conditions," said the Fed''s policy meeting on May 4. "At present, participants considered it was important to move expeditiously to a more neutral monetary policy policy strategy."

"They noted that a more restrictive approach of policy might be appropriate if it comes to the economy''s change and the potential risks," said the official official.

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Following the release of the minutes at 2:00 pm Eastern time, U.S. stocks traded modestly higher, with the Dow Jones Industrial Average trading 15 points lower on the session, and the S&P 500 trading 12 points higher.

The 10-year Treasury note yields were somewhat up by 2.752 percent, while the US dollar index was 0.4% higher at 102.258.

The CME Group''s FedWatch tool suggests a 94.1% chance of a 50 basis point hike in June, followed by a 92.3% chance of a similar-sized hike in July. Delegates for deeper rate hikes begin to fade as the Fed closer to its so-called neutral Fed Funds rate of between 2% and 5.5 percent.

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