FOMC Excerpt: Risks Facing Outlook Roughly Balanced -Text>

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

Market Committee minutes of the May 1 - 2 meeting, published Wednesday:

     Participants commented on a number of risks and uncertainties 

associated with their expectations for economic activity, the labor 

market, and inflation over the medium term. Some participants saw a risk 

that, as resource utilization continued to tighten, supply constraints 

could develop that would intensify upward wage and price pressures, or 

that financial imbalances could emerge, which could eventually erode the 

sustainability of the economic expansion. Alternatively, some 

participants thought that a strengthening labor market could bring a 

further increase in labor supply, allowing the unemployment rate to 

decline further with less upward pressure on wages and prices. Another 

area of uncertainty was the outlook for fiscal and trade policies. 

Several participants continued to note the challenge of assessing the 

timing and magnitude of the effects of recent fiscal policy changes on 

household and business spending and on labor supply over the next 

several years. In addition, they saw the trajectory of fiscal policy 

thereafter as difficult to forecast. With regard to trade policies, a 

number of participants viewed the range of possible outcomes for 

economic activity and inflation to be particularly wide, depending on 

what actions were taken by the United States and how U.S trading 

partners responded. And some participants observed that while these 

policies were being debated and negotiations continued, the uncertainty 

surrounding trade issues could damp business sentiment and spending. In 

their discussion of the outlook for inflation, a few participants also 

noted the risk that, if global oil prices remained high or moved higher, 

U.S. inflation would be boosted by the direct effects and pass-through 

of higher energy costs. Financial conditions tightened somewhat over the 

intermeeting period but remained accommodative overall. The foreign 

exchange value of the dollar rose modestly, but this move retraced only 

a bit of the depreciation of the dollar since its 2016 peak. With their 

decline over the intermeeting period, equity prices were about 

unchanged, on net, since the beginning of the year but were still near 

their historical highs. Longer-term Treasury yields rose, but somewhat 

less than shorter-term yields, and the yield curve flattened somewhat 

further. 

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

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