Trial now

Opening calls


Bond extensions


Outlook Remains Bearish

     WASHINGTON (MNI) - The following are excerpts from the Federal Open 
Market Committee minutes of the December 12 - December 13 meeting, 
published Wednesday: 
     Messrs. Evans and Kashkari dissented because they preferred to 
maintain the existing target range for the federal funds rate at this 
     In Mr. Evanss view, with inflation continuing to run substantially 
below 2 percent and measures of inflation expectations lower than he 
believed to be consistent with a symmetric 2 percent inflation 
objective, it was important to pause in the process of policy 
normalization. Leaving the target range at 1 to 1 percent for a time 
would better support an increase in inflation expectations, increase the 
likelihood that inflation will rise to 2 percent and perhaps modestly 
beyond, and thus provide more support for the symmetry of the 
Committees inflation objective. Such a pause also would better allow 
the Committee time to assess the degree to which earlier soft readings 
on inflation were transitory or more persistent. 
     In Mr. Kashkaris view, while employment growth remained strong, 
wage growth had not picked up and inflation remained notably below the 
Committees 2 percent target. In addition, the yield curve had flattened 
as long-term rates had not moved higher even though the Committee raised 
the federal funds rate target range. He was concerned that the 
flattening yield curve was partly due to falling longer-term inflation 
expectations or a lower neutral real rate of interest. He preferred to 
wait for inflation to move closer to 2 percent on a sustained basis or 
for inflation expectations to move up before further raising the target 
range for the federal funds rate. 
     ** MNI Washington Bureau: (202)371-2121 ** 
[TOPICS: MMUFE$,M$U$$$,MT$$$$]