Published: Thu, April 12, 2018
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Fed minutes on future key policy rate trend

Fed minutes on future key policy rate trend

Committee members unanimously "viewed the recent data and other developments bearing on real economic activity as suggesting that the outlook for the economy beyond the current quarter had strengthened in recent months".

"There it is. The first acknowledgement that they might have to tighten monetary policy, take away the punch bowl, raise interest rates high enough to slow the economy down", said Chris Rupkey, chief financial economist at MUFG Union Bank of NY.

Inflation, by the Fed's preferred gauge, has persistently fallen below the 2 percent target over the past six years, reflecting a range of factors from the severity of the Great Recession to a temporary dip in global oil prices and a weak global economy.

The Fed's target range for its benchmark lending rate is now between 1.50 and 1.75 percent.

The Fed maintained its forecast for two more rate hikes this year, after speculation about whether budding inflation would push it towards raising its outlook to three increases.

The Fed's preferred measure of inflation now sits at 1.6 percent and has undershot its 2 percent target rate for six years but various indicators have recently pointed to an uptick in price pressures.

The 12-month rate of core consumer price, stripping out food and energy prices, advanced to 2.1% from 1.8%, government figures showed this morning.

The Fed released the document on Wednesday.

But the minutes indicate Fed policymakers were concerned about downside risks.

It was also the first meeting led by Fed Chairman Jerome Powell, who took the helm of the central bank in February. They include possible retaliation by other countries in response to President Donald Trump's trade policies.

Since the March meeting, Fed officials have largely adopted a wait-and-see attitude to trade policy, noting it is not yet clear if the tariffs will go into effect and their eventual size if implemented.

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