Fed, published the minutes of the meeting of the Federal Open Market Committee (FOMC) held on June 15-16.
In the minutes of the last meeting, where the policy rate was kept constant in the range of 0-0.25 percent, it was noted that the progress in vaccination reduced the spread of the new type of coronavirus (Covid-19) epidemic in the USA, and economic activity and employment indicators strengthened with this progress and strong policy support.
In the minutes, it was reiterated that the course of the economy in general will largely depend on the course of the virus, and it was emphasized that the progress in vaccination will continue to reduce the effects of the public health crisis on the economy, but the risks to the economic outlook remain.
Concerns were raised that long-term inflation expectations could rise to inappropriate levels
It was stated in the minutes that meeting participants expected labor market conditions to continue to improve, and that inflation was expected to rise above 2 percent in the near term.
In the minutes, it was stated that although the participants generally saw that the risks to the economic outlook were balanced, a significant majority of them believed that the risks to inflation forecasts were on the upside.
In the minutes, it was noted that several participants expressed their concerns that long-term inflation expectations may rise to inappropriate levels if high inflation readings continue, while some participants argued that downside risks on inflation continue as temporary price pressures may end faster than expected.
“Economic recovery is not complete, risks to economic outlook continue”
“Participants generally agreed that the economic recovery is not complete and risks to the economic outlook remain,” the minutes said. assessment was included.
In the minutes, which stated that the participants were of the opinion that the current monetary policy stance and guidance is appropriate, it was stated that in the light of the incoming data and their effects on their economic outlook, some participants expected that the economic conditions set forth in the forward guidance for interest rates could be achieved a little earlier than anticipated in March.
“However, some respondents stressed that uncertainty about the economic outlook has increased and it is too early to draw firm conclusions about the labor market and the course of inflation,” the minutes said. expression was used.
Supportive stance of monetary policy will continue
It was noted in the minutes that the Fed’s asset purchases were also discussed:
“Although attendees expected continued progress, the Committee’s standard of ‘substantial progress’ was seen as not yet met. Various participants stated that they expect the conditions to begin deceleration in asset purchases in light of the incoming data, a little earlier than they expected at previous meetings. He saw that it provided a less clear indication of the future and decided that the Committee would have information in the coming months to make a better assessment of the labor market and the course of inflation.
In the minutes, he stressed that many of the participants should be patient as they evaluate progress towards the Committee’s goals and explain the change in asset purchase plans.
In the Fed minutes, it was noted that members are expected to maintain their supportive monetary policy stance until the Committee’s goals are met.
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