WASHINGTON: US Federal Reserve officials at their last meeting agreed that their current patient approach to setting monetary policy could remain in place “for some time,” a further sign policymakers see little need to change rates in either direction.
“Members observed that a patient approach...would likely remain appropriate for some time,” with no need to raise or lower the target interest rate from its current level of between 2.25 and 2.5 per cent, the Fed on Wednesday reported in the minutes of the central bank’s April 30-May 1 meeting.
Recent weak inflation was viewed by “many participants...as likely to be transitory,” while risks to financial markets and the global economy had appeared to ease - a judgment rendered before the Trump administration imposed higher tariffs on Chinese goods and took other steps that intensified trade tensions.
Still, Dallas Federal Reserve president Robert Kaplan in a Wednesday interview on Fox Business said that to move rates higher or lower, “I would need to see something compelling...We are basically at the right policy setting.”
Analysts saw little new in the minutes regarding Fed policy, though some noted that policymakers’ views may have changed in the intervening weeks since Trump took a harder trade line with China.
“The re-escalation in the trade tension between US and China since the meeting, that could change Fed’s outlook a lot,” said Eric Stein, co-director of the global income group at Eaton Vance Management in Boston.
The minutes showed the Fed delving deep into the mechanics of how they could best structure their holdings of several trillion dollars of securities to battle a future economic downturn.— Reuters
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