FOMC Excerpt: Evans, Kashkari Dissent on Below Tgt Infl-Text>

     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 

meeting. 

     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 ** 

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