Minutes suggest ‘more restrictive’ Fed policy if inflation doesn’t fall.

• Federal Reserve officials highlighted the need to fight inflation even if it meant slowing economy.
• Members predicted that another 50- or 75-basis point move would likely occur at the July meeting.
• One tenth of a percentage point is referred to as a basis point.

According to meeting minutes disclosed on Wednesday, Federal Reserve officials highlighted the need to fight inflation even if it meant slowing an already-appearing-to-be-in-recession economy.

Members predicted that another 50- or 75-basis point move would likely occur at the July meeting. One tenth of a percentage point is referred to as a basis point.

The minutes noted that participants “continued to believe that ongoing increases in the target range for the federal funds rate would be appropriate to achieve the Committee’s objectives in addressing potential policy measures at forthcoming meetings.” Participants felt that, in particular, an increase of 50 or 75 basis points would probably be appropriate at the following meeting.

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The decision by central bankers to hike benchmark borrowing rates by three-quarters of a percentage point was justified as being required to rein in cost-of-living increases that have reached their highest levels since 1981.

Participants agreed that the economic outlook called for a more stringent posture of policy, and they acknowledged that if rising inflation pressures persisted, a still more restrictive attitude might be necessary.

They admitted that the tightening of the policy will probably cost something.

According to the meeting summary, “Participants recognised that policy firming could temporarily delay the rate of economic development, but they considered the return of inflation to 2 percent as important to achieving maximum employment on a sustained basis.”

After a remarkable sequence in which policymakers seemed to have a last-minute change of heart after saying for weeks that a 50 basis point rise was almost certain, they decided to raise rates by 75 basis points.

The Federal Open Market Committee, which sets interest rates, decided to take a more restrictive stance in response to statistics showing that consumer prices are increasing at an annual pace of 8.6 percent and inflation expectations are rising.

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