**MNI POLICY: Majority of FOMC Saw No Rate Change This Year>

--Top Takeaways From Minutes Of the March 19-20 FOMC Meeting

By Jean Yung and Kevin Kastner

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

minutes of the March 19-20 FOMC meeting released Wednesday:

     --A majority of Fed officials expected no interest rate change for 

the rest of the year, though some officials said it would be appropriate 

to raise rates "modestly" later this year if growth runs slightly above 

trend as they expect. Several officials said the fed funds rate is 

already close to their estimates of the neutral rate. Separetly, several 

officials noted that rates could move "in either direction" based on 

incoming data and other developments. 

     --Officials "generally agreed" that a patient approach to adjusting 

the fed funds rate remained appropriate though several officials want 

to review that guidance "regularly." A couple officials warned that 

the "patient" characterization should not be seen as limiting the Fed's 

options for adjusting policy. 

     --Officials noted slower economic growth in the early part of this 

year compared to the fourth quarter of 2018 and said "some time would be 

needed" to assess whether this weakness would persist. They stressed 

"significant uncertainties" surrounding the outlook, in particular 

around ongoing trade talks, Brexit and spillovers from the slowdown in 

Europe and China, but noted that downside risks were lower than in 

January. 

     --Inflation remained muted. To the extent that indicates more slack 

in the labor market, some officials noted that rates should respond 

"modestly" to signs of labor market tightening. 

     --The scope for reducing reserves much further after the end of 

balance sheet runoff might be "fairly limited," and several officials 

called for resuming purchases of Treasuries "relatively soon" after 

runoffs end. Others preffered to allow reserves to decline "for a longer 

time" to learn more about underlying reserves demand. Reserves were 

expected to fall to a new low of $1.4 trillion by early May. 

     --The Open Markets Desk proposed a "minimum operating level 

approach" to maintain the level of reserves in the system on a daily 

basis. Open market operations would keep the daily level of reserves 

above a set minimum level. The average level of reserves over the medium 

term would be above that minimum operating level, providing a buffer to 

absorb volatility in reserves levels. 

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

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