**MNI 5 Things: Addition of "Further" On Firmer Outlook>

--5 Things We Learned From The FOMC Minutes

By Kevin Kastner

     WASHINGTON (MNI) - The following are the key points from the FOMC 

minutes release of the January 30-31 meeting released by the Federal 

Reserve Wednesday: 

     - The addition of the word "further" to apply to gradual rate 

increases in the FOMC statement was no mistake. The minutes show that 

the members saw a stronger near-term outlook "increased the likelihood 

that a gradual upward trajectory of the federal funds rate would be 

appropriate" and agreed to alter the wording in the statement to reflect 

their updated characterization, even as they held rates steady. 

     - Members still believed that further gradual adjustments, economic 

activity would expand at a "moderate pace" with strong labor market 

conditions, but indicated that recent data had shown a stronger 

near-term outlook than at the time of the December meeting. A number of 

participants noted at the January meeting that they had raised their 

economic growth forecasts from where they were at the time of the 

December meeting. 

     - Members saw the impact of the new tax legislation as being "a bit 

greater in the near term than they had previously thought. Several saw 

increased upside risks to near-term economic activity outlook, but 

generally still saw the risks as roughly balanced. 

     - Several members saw both upside and downside risks to the 

inflation outlook, but a couple of members were still concerned that 

there has been "little evidence" of improvement in underlying inflation, 

inflation expectations, or wages. Some participants noted "an 

appreciable risk" that inflation growth would remain below the Fed's 

objective, suggesting that the FOMC could "afford to be patient" with 

pace of their rate increases. 

     - Several participants expected declines in the value of the dollar 

recently would likely help push inflation up to 2% over the medium term.

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

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