Highlights of the minutes of the September 17-18 2019 FOMC meeting:
- Officials pointed to economic outlook risk management and inflation objectives
- Several said models on likelihood of recession in medium term had increased notably
- Policymakers generally more concerned about risks associated with trade tensions, geopolitics and global economy
- Clearer picture had emerged on weakness in investment, factories and exports
- Readings on labor markets and overall economy strong
- Several policymakers favored keeping rates steady, saying baseline projections had changed very little and that uncertainties would not derail expansion
- A couple policymakers said a rate cut might be too much insurance
- A few policymakers said markets were pricing in more future accommodation than what they see as appropriate; might need to better align expectations
- A couple of participants raised the concern that keeping policy rates low for a long time could lead to excessive risk-taking in financial markets and threaten financial stability.
- Several participants suggested that the Committee's postmeeting statement should provide more clarity about when the recalibration of the level of the policy rate in response to trade uncertainty would likely come to an end.
The minutes showed a debate emerging on when to stop the easing cycle. A highlight for me is that 'several' wanted to keep rates steady. That indicates a good chunk reluctantly went along with the September plan to ease but they might not be so happy to continue playing along.
