FOMC Excerpt: Tariffs Pose Downside Risk To Outlook -Text>

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

Market Committee minutes of the July 31-August 1 meeting, published 

Wednesday:

     "Participants commented on a number of risks and uncertainties 

associated with their outlook for economic activity, the labor market, 

and inflation over the medium term. They generally continued to see 

fiscal policy and the strengthening of the labor market as supportive of 

economic growth in the near term. Some noted larger or more persistent 

positive effects of these factors as an upside risk to the outlook. A 

few participants indicated, however, that a faster-than-expected fading 

of the fiscal impetus or a greater-than-anticipated subsequent fiscal 

tightening constituted a downside risk. In addition, all participants 

pointed to ongoing trade disagreements and proposed trade measures as an 

important source of uncertainty and risks. Participants observed that 

if a large-scale and prolonged dispute over trade policies developed, 

there would likely be adverse effects on business sentiment, investment 

spending, and employment. Moreover, wide-ranging tariff increases would 

also reduce the purchasing power of U.S. households. Further negative 

effects in such a scenario could include reductions in productivity and 

disruptions of supply chains. Other downside risks cited included the 

possibility of a significant weakening in the housing sector, a sharp 

increase in oil prices, or a severe slowdown in EMEs." 

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

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