Notion AI offers an easy to use, one click command, that automatically summarizes a portion of text highlighted.
For the purposes of this example, I entered the text of a recent WSJ article, Fed Minutes Show Most Officials Favored Quarter-Point Rate Rise.
The original article text is listed below:
Most Federal Reserve officials thought slowing the pace of interest-rate increases at their meeting three weeks ago offered the best way to balance the risks of doing too much or too little to combat inflation, but some warned against the hazards of slowing or stopping rate increases too soon.
“A number of participants observed that a policy stance that proved to be insufficiently restrictive could halt recent progress in moderating inflationary pressures,” said the minutes of the Jan. 31-Feb. 1 meeting, released Wednesday.
Fed officials unanimously approved raising their benchmark federal-funds rate by a quarter percentage point to a range between 4.5% and 4.75% on Feb. 1. That increase followed six larger increases, including a half percentage point in December.
Reserve Chair Jerome Powell said Wednesday the central bank will raise interest rates a quarter-percentage-point. Powell said more increases will likely be needed to continue lowering inflation.
The minutes of the gathering said that “almost all participants agreed that it was appropriate” to raise rates by a quarter point, or 25 basis points. Many of these officials “observed that a further slowing in the pace of rate increases would better allow them to assess the economy’s progress… as they determine the extent of future policy tightening,” the minutes said.
But a few participants favored or would have also agreed to a larger half-point move, the minutes said. “The participants favoring a 50-basis-point increase noted that a larger increase would more quickly bring the target range close to the levels they believed would achieve a sufficiently restrictive stance,” the minutes said.
Their discussion suggested another increase of a quarter point was likely at their next meeting on March 21-22. Since then, new data indicated stronger economic activity and slower progress on inflation than previously expected, which could keep the Fed raising rates longer than anticipated before the latest reports.
At the time of the recent meeting, Fed Chair Jerome Powell was facing increasing skepticism from investors over whether the central bank would continue raising rates because economic activity had been mixed around year’s end, with signs that consumer spending had moderated and weakness in the hard-hit housing sector was spreading to manufacturing. Investors were also anticipating rate cuts later this year.
The Fed raises rates to combat inflation by slowing the economy through tighter financial conditions—such as higher borrowing costs, lower stock prices and a stronger dollar—that curb demand.
Most Fed officials projected in December that they would raise the fed-funds rate to 5.1% this year, which would imply quarter-point rate increases at their next two meetings, in March and May. More than a third of officials anticipated lifting the rate above 5.25%. No officials projected rate cuts this year.
Some officials at the meeting observed that any continued easing in financial conditions could require the Fed to raise rates to higher levels or keep them at higher levels for longer than anticipated.
In the three weeks since they met, fresh U.S. economic reports showed that hiring and retail spending surged in January. The unemployment rate fell to 3.4%, a 53-year low, surprising economists who have long anticipated that Fed rate increases would slow economic growth soon. Economic growth also has rebounded in Europe, further easing worries of a global recession this year.
As a result, investors now expect the Fed to lift the fed-funds rate to around 5.4% in June–more than central bank officials had projected in December.
Inflation’s swift decline late last year also stalled in January. The 12-month inflation rate edged down to 6.4% last month from 6.5% in December and a recent high of 9.1% in June, according to the Labor Department. The department’s widely followed gauge, the consumer-price index, rose a sturdy 0.5% in January from the month before, a sign of still strong price pressures.
Two Fed presidents said last week they would have supported a larger half-point rate rise at the last meeting, rather than the quarter-point increase approved. One of them, Cleveland Fed President Loretta Mester, said officials aren’t limited to quarter-point steps. “We can move faster, and we can do bigger [increases] at any particular meeting.”
St. Louis Fed President James Bullard also said he would support moving as quickly as possible to raise the fed-funds rate to 5.4%. “I don’t see much merit in delaying our approach to that level,” he told reporters last week.
Most other Fed officials have expressed a preference for quarter-point increases. Richmond Fed President Tom Barkin told reporters last week he liked that approach “because I believe it gives us the flexibility to respond” depending on how the economy evolves.
Mr. Barkin said he didn’t favor moving rapidly to an estimated peak rate before pausing because he isn’t confident the central bank can gauge how much its past rate moves are slowing the economy. “That theory, to me, requires more confidence in understanding” the effectiveness of tighter rate policy “than I have,” he said.
Overall inflation had slowed in recent months largely because of falling prices of energy and other goods. Large increases in housing costs have slowed, but haven’t yet filtered through to official price gauges. Mr. Powell has nevertheless justified continued rate increases by pointing to still-tight labor markets, elevated wage pressures and high inflation for labor-intensive services.
Mr. Barkin noted the surprising strength in January spending and hiring, but said he wasn’t ready to substantially revise his economic outlook because of the potential for unusual seasonal volatility, including a longer holiday spending season in the fourth quarter, warmer weather and changes in how employers are managing their staffing given recent difficulties hiring workers.
Investors’ shifting expectations about the Fed could already be helping the central bank because interest-rate policies work through financial markets. Changes to the anticipated trajectory of rates, and not just what the Fed does at any meeting, can influence broader financial conditions.
Since November, anticipation of a milder interest-rate path led financial conditions to ease somewhat after tightening substantially last year. The average 30-year fixed mortgage rate, for example, jumped from 4% one year ago to 7% in November. It then edged lower, to around 6% earlier this month.
Over the past two weeks, however, financial conditions have tightened again as investors anticipate an interval of higher short-term interest rates. Mortgage lenders have reported rates are returning back to 7% in recent days.