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WASHINGTON (MNI) - The following are excerpts from the Federal Open
Market Committee minutes of the December 12 - December 13 meeting,
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.
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