FOMC Excerpt: Patience Warranted 'For Some Time' >

WASHINGTON (MNI) - The following is an excerpt from the Federal Open 

Market Committee minutes of the April 30 - May 1 meeting, published 

Wednesday:

     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.

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     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 ** 

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