Fed Minutes: Interest Rates to Remain Steady for 'Some Time'

Ann Santiago
May 26, 2019

In an interview with the Fox Business Network, Daly said she expects inflation to move to the Fed's 2% target, but not above that level.

The minutes from the U.S. Federal Reserve's May monetary policy meeting showed policymakers remained firmly committed to a "patient" policy approach, stating interest rates likely will remain unchanged well into the future. The Fed's latest meeting ended May 1 - several days before trade talks between the U.S. and China began to break down, weighing on markets.

According to minutes of the Fed's April 30-May 1 meeting released on Wednesday, officials also delved deep into the mechanics of how they could best structure their holdings of several trillion dollars of securities to battle a future economic downturn.

The May FOMC minutes detailed a reserved conversation among policymakers who believed that patience on rates would be appropriate for the foreseeable future.

'Other sources of uncertainty remained.


"Participants continued to view sustained expansion of economic activity, with strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes", the minutes said.

One of the more "dovish" rate-setters at the Federal Reserve said on Wednesday that the U.S. central bank may want to consider interest rate cuts if inflation readings continue to disappoint.

Meanwhile, given "global economic and financial developments as well as muted inflation pressures, participants generally agreed that a patient approach" to deciding on the benchmark lending rate "remained appropriate".

Consistent with Fed Chair Jerome Powell's press conference after the meeting, participants observed "at least part of the recent softness in inflation could be attributed to idiosyncratic factors".

Dallas Federal Reserve Bank President Robert Kaplan told the Fox Business Network that it was too soon to say what effects USA tariffs on Chinese imports would do to the country's currency or inflation rate. Mark Hamrick, an economic analyst, said that investors shouldn't expect the Fed to listen to Trump. After taking an aggressive approach to rate hikes since 2015, the Fed has made a decision to take a calmer approach in 2019.

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