FOMC Minutes Suggest Confidence in Strengthening Economy and Inflation

Fed meeting minutes show all policy-makers predicting a strengthening economy

Fed meeting minutes show all policy-makers predicting a strengthening economy

The Federal Reserve at 2 p.m. ET will release minutes of the policy meeting it held last month. Essentially, Fed policy has been "accommodative" or supporting growth since the financial crisis ended a decade ago.

The readout of the March meeting, however, showed that policymakers were wary about the impact of the Trump administration's trade and fiscal policies.

Most surprisingly, "all" Fed officials saw some further firming of monetary policy as likely to be needed. Many market players forecast the Fed will raise the key rate at their policy meeting in June. "Almost all participants agreed that it remained appropriate to follow a gradual approach to raising the target range for the federal funds rate". It was the sixth hike since December 2015, and a step further away from policies that were created to recover the economy after the Great Recession.

However, the meeting minutes showed that already some Fed officials anxious the central bank would have to move faster than previously expected.


However, the meeting minutes showed that already some Fed officials anxious the central bank would have to move faster than previously expected.

"All members viewed the recent data and other developments bearing on real economic activity as suggesting that the outlook for the economy beyond the current quarter had strengthened in recent month", the meeting minutes read. As a result, the Committee strengthened their view that inflation would increase and stabilize around their stated 2 percent goal in the coming months.

In itself, that, they said, "would not justify a change in the projected path for the federal funds rate".

Also worth noting, "a number" of the Fed's highest-ranking officials also thought that uncertainty about whether the recently approved tax cuts would become permanent or about the implications of running wider government spending deficits represented sources of downside risk to growth.

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