FOMC Excerpt: Futher Policy Firming Likely Warranted-Text>

WASHINGTON (MNI) - The following are excerpts from the Federal Open 

Market Committee minutes of the March 20-21 meeting, published 

Wednesday:

     With regard to the medium-term outlook for monetary policy, all 

participants saw some further firming of the stance of monetary policy 

as likely to be warranted. Almost all participants agreed that it 

remained appropriate to follow a gradual approach to raising the target 

range for the federal funds rate. Several participants commented that 

this gradual approach was most likely to be conducive to maintaining 

strong labor market conditions and returning inflation to 2 percent on a 

sustained basis without resulting in conditions that would eventually 

require an abrupt policy tightening. A number of participants indicated 

that the stronger outlook for economic activity, along with their 

increased confidence that inflation would return to 2 percent over the 

medium term, implied that the appropriate path for the federal funds 

rate over the next few years would likely be slightly steeper than they 

had previously expected. Participants agreed that the longer-run normal 

federal funds rate was likely lower than in the past, in part because of 

secular forces that had put downward pressure on real interest rates. 

Several participants expressed the judgment that it would likely become 

appropriate at some point for the Committee to set the federal funds 

rate above its longerrun normal value for a time. Some participants 

suggested that, at some point, it might become necessary to revise 

statement language to acknowledge that, in pursuit of the Committees 

statutory mandate and consistent with the median of participants policy 

rate projections in the SEP, monetary policy eventually would likely 

gradually move from an accommodative stance to being a neutral or 

restraining factor for economic activity. However, participants 

expressed a range of views on the amount of policy tightening that would 

likely be required over the medium term to achieve the Committees 

goals. Participants agreed that the actual path of the federal funds 

rate would depend on the economic outlook as informed by incoming data. 

     ** MNI Washington Bureau: (202)371-2121 ** 

[TOPICS: MMUFE$,M$U$$$,MT$$$$]