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WASHINGTON (MNI) - The following is an excerpt from the Federal Open
Market Committee minutes of the April 30 - May 1 meeting, published
Members observed that a patient approach to determining future
adjustments to the target range for the federal funds rate would likely
remain appropriate for some time, especially in an environment of
moderate economic growth and muted inflation pressures, even if global
economic and financial conditions continued to improve.
A number of participants observed that some of the risks and
uncertainties that had surrounded their outlooks earlier in the year had
moderated, including those related to the global economic outlook,
Brexit, and trade negotiations. That said, these and other sources of
uncertainty remained. In light of global economic and financial
developments as well as muted inflation pressures, participants
generally agreed that a patient approach to determining future
adjustments to the target range for the federal funds rate remained
appropriate. Participants noted that even if global economic and
financial conditions continued to improve, a patient approach would
likely remain warranted, especially in an environment of continued
moderate economic growth and muted inflation pressures.
Participants discussed the potential policy implications of
continued low inflation readings. Many participants viewed the recent
dip in PCE inflation as likely to be transitory, and participants
generally anticipated that a patient approach to policy adjustments was
likely to be consistent with sustained expansion of economic activity,
strong labor market conditions, and inflation near the Committees
symmetric 2 percent objective. Several participants also judged that
patience in adjusting policy was consistent with the Committees
balanced approach to achieving its objectives in current circumstances
in which resource utilization appeared to be high while inflation
continued to run below the Committees symmetric 2 percent objective.
However, a few participants noted that if the economy evolved as they
expected, the Committee would likely need to firm the stance of monetary
policy to sustain the economic expansion and keep inflation at levels
consistent with the Committees objective, or that the Committee would
need to be attentive to the possibility that inflation pressures could
build quickly in an environment of tight resource utilization. In
contrast, a few other participants observed that subdued inflation
coupled with real wage gains roughly in line with productivity growth
might indicate that resource utilization was not as high as the recent
low readings of the unemployment rate by themselves would suggest.
Several participants commented that if inflation did not show signs of
moving up over coming quarters, there was a risk that inflation
expectations could become anchored at levels below those consistent with
the Committees symmetric 2 percent objectivea development that could
make it more difficult to achieve the 2 percent inflation objective on a
sustainable basis over the longer run. Participants emphasized that
their monetary policy decisions would continue to depend on their
assessments of the economic outlook and risks to the outlook, as
informed by a wide range of data.
** MNI Washington Bureau: (202)371-2121 **