Highlights from the March 20-21 FOMC minutes
- Almost all agreed gradual rate hikes appropriate
- All agreed economic outlook had strengthened in recent months
- Strong majority agreed prospect of retaliatory trade actions by other countries as downside risk for US economy
- Despite expectations for rising y/y inflation, policymakers agreed that alone would not justify change in projected rate hike path
- Several said Fed funds rate will likely need to be above long-term normal rate for a time
- Some said future Fed statements might need to signal that policy will shift to being a neutral or restraining factor for the economy
- The Fed sees a 'significant' fiscal policy growth boost over the next few years
- Participants noted slow recent household spending and investment but expect it to be transitory pointing to factors including 1) delayed payment of personal tax refunds 2) residual seasonality in data
- Not a single member saw balance of risks to the downside for inflation
- Full text
Key passage:
"A number of participants indicated that the stronger outlook for economic activity, along with their increased confidence that inflation would return to 2 percent over the medium term, implied that the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected."
Another one:
"All participants agreed that the outlook for the economy beyond the current quarter had strengthened in recent months"
There is a lot to digest here. My quick take this is undoubtedly hawkish.
Here's the lede from Reuters: "All of the Federal Reserve's policymakers felt that the U.S. economy would firm further and that inflation would rise in the coming months."
Bloomberg focuses more on worries about a trade war in the minutes
