FOMC Minutes: Most policymakers noted risk of easing too quickly

  • Most emphasized importance of incoming data in judging if inflation is moving sustainably to 2%
  • Members agreed that they did not expect that it would be appropriate to reduce the target range until they have gained greater confidence that inflation is moving sustainably toward 2 percent
  • Fed officials judged policy rate likely at its peak for this cycle
  • Participants highlighted the uncertainty associated with how long a restrictive monetary policy stance would need to be maintained
  • A couple of policymakers pointed to downside risks form maintaining overly restrictive policy for too long
  • Several emphasized communicating clearly about data-depending approach
  • Fed staff saw risks to economic forecast skewed to the downside
  • Staff placed ‘some weight’ on chance that further progress on inflation could take longer than expected
  • Staff economic outlook was slightly stronger than December projection
  • Officials highlighted uncertainty around how long restrictive policy stance would be needed
  • Full text

“Most participants noted the risks of moving too quickly to ease the stance of policy and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2 percent,” the Minutes said.

The initial reaction is US dollar selling. I suspect many were worried about a more-hawkish message in the minutes and there is a sigh of relief afterwards.

This article was written by Adam Button at Source