FOMC Minutes: Policymakers agreed a fall in longer-term inflation expectations would be undesirable
|The minutes from the July (25th & 26th) Federal Reserve’s monetary policy meeting have been published, stating that policymakers agreed a fall in longer-term inflation expectations would be undesirable.
Key headlines (via Reuters):
- Policymakers held wide-ranging debates over inflation outlook, stock prices and financial stability - July 25-26 policy meeting minutes
- Some policymakers were prepared to announce at July 25-26 meeting a starting date for winding down of balance sheet - minutes
- Some voting policymakers said further interest rate hikes should wait until there were signs inflation would rise to Fed's 2 pct target
- Voting policymakers were concerned about slowdown in inflation and agreed to monitor prices closely
- Policymakers disagreed on whether inflation expectations were well-anchored
- Most policymakers expected inflation to pick up in next few years, but many saw rising chances of inflation remaining below target
- Several policymakers noted rising stock prices had eased financial conditions
- Policymakers had differing views on whether high stock prices were of consequence for monetary policy
- A couple policymakers said high stock prices might not pose big risks to financial stability
- Policymakers judged it was important to look for signs of declining market volatility or concentration of investors in particular assets
- A couple policymakers saw pace of price gains in multi-family real estate and lending activity of certain government-sponsored firms as possible sources of financial instability
- Policymakers agreed it would be undesirable for current financial regulation framework to change to allow reemergence of past risky practices
- Several policymakers said uncertainty over federal fiscal, trade and healthcare policies was reducing company spending and hiring plans
- A few policymakers said likelihood of near-term fiscal stimulus had fallen further
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