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Stronger In a Range

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Weaker In A Range

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Ending The Week On A Soft Note

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Bearish Risk Growing

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Stronger, But Still Vulnerable

US

SP500 PE Ratio vs. CPI Inflation

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.
***********************************************************************
     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$$$,MT$$$$]