FOMC Excerpt: Trade Concerns, Tax Effects Uncertain-Text>

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

Market Committee minutes of the March 20-21 meeting, published 

Wednesday:

     A number of participants reported concern among their business 

contacts about the possible ramifications of the recent imposition of 

tariffs on imported steel and aluminum. Participants did not see the 

steel and aluminum tariffs, by themselves, as likely to have a 

significant effect on the national economic outlook, but a strong 

majority of participants viewed the prospect of retaliatory trade 

actions by other countries, as well as other issues and uncertainties 

associated with trade policies, as downside risks for the U.S. economy. 

Contacts in the agricultural sector reported feeling particularly 

vulnerable to retaliation. 

     Tax changes enacted late last year and the recent federal budget 

agreement, taken together, were expected to provide a significant boost 

to output over the next few years. However, participants generally 

regarded the magnitude and timing of the economic effects of the fiscal 

policy changes as uncertain, partly because there have been few 

historical examples of expansionary fiscal policy being implemented when 

the economy was operating at a high level of resource utilization. A 

number of participants also suggested that uncertainty about whether all 

elements of the tax cuts would be made permanent, or about the 

implications of higher budget deficits for fiscal sustainability and 

real interest rates, represented sources of downside risk to the 

economic outlook. A few participants noted that the changes in tax policy

could boost the level of potential output. 

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

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