At their last monetary policy meeting, Federal Reserve officials mulled financial stability risks that existed in part due to their aggressive campaign of rate rises, as they also expressed concern over the political fight among elected officials over raising the country's debt limit.
At the most recent Fed meeting, officials lifted their overnight target rate range by a quarter percentage point to between 4.5% and 4.75%, as they downshifted the pace of their rate rises aimed at bringing high inflation under control.
That said, many market participants have been worried the swift rise in the cost of borrowing could cause trouble for investors and financial firms, and asset markets have been under considerable pressure from Fed actions, which also include a contraction of central bank bond holdings. Fed officials appear to agree. "A number of participants stressed that a drawn-out period of negotiations to raise the federal debt limit could pose significant risks to the financial system and the broader economy," the minutes said.
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