FOMC Excerpt: To Monitor Flattening Yield Curve -Text>

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

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

     Meeting participants also discussed the recent flatter profile of 

the term structure of interest rates. Participants pointed to a number 

of factors contributing to the flattening of the yield curve, including 

the expected gradual rise of the federal funds rate, the downward 

pressure on term premiums from the Federal Reserves still-large balance 

sheet as well as asset purchase programs by other central banks, and a 

reduction in investors estimates of the longer-run neutral real 

interest rate. A few participants noted that such factors could make the 

slope of the yield curve a less reliable signal of future economic 

activity. However, several participants thought that it would be 

important to continue to monitor the slope of the yield curve, 

emphasizing the historical regularity that an inverted yield curve has 

indicated an increased risk of recession. 

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

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