**MNI 5 Things:FOMC Minutes: June Could See Hike, IOER Rise>

--Five Things We Learned From The Minutes Of The May 1-2 FOMC Meeting

By Jean Yung, Sara Haire, Holly Stokes, and Kevin Kastner

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

minutes of the May 1-2 FOMC meeting released Wednesday:

     - The minutes from the meeting showed that participants expect that 

if incoming data confirm their current economic outlook, "it would 

likely soon be appropriate for the Committee to take another step in 

removing policy accommodation," perhaps a hint toward a June hike. 

     -  The participants also discussed setting the interest paid on 

excess reserves (IOER) "modestly below the top range for the federal 

funds rate." The change could happen as soon as the June meeting, as 

participants agreed that "would simplify FOMC communications and 

emphasize that the IOER rate is a helpful tool for implementing the 

FOMC's policy decisions, but does not, in itself, convey the stance of 

policy." 

     -  Participants also said that as increases in the target range for 

the federal funds rate continued, it may be necessary to soon alter the 

forward guidance in the statement about the FFR remaining below its 

longer run level or that "the stance of monetary policy remains 

accommodative." 

     - It was noted that it was "premature to conclude that inflation 

would remain at levels around 2%" given the history of inflation running 

below that objective. Likewise, a few participants noted that inflation 

could move above the 2% objective temporarily, but it was noted that 

would be consistent with the symmetric objective "and could be helpful 

in anchoring longer-run inflation expectations at a level consistent 

with that objective." 

     - A few suggested the flatter yield curve may not be a good 

predictor of future economic activity, but several said it should 

continue to be monitored as it has a history of predicting increased 

risk of recession. 

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

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