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Fed officials more upbeat about the economic outlook this year, minutes show


Thursday, 20 February 2020 02:35 WIB

Fiskal & Moneter


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Federal Reserve officials and the central bank’s staff said the U.S. economy seemed stronger in late January than they had expected, according to minutes of their late-January meeting released Wednesday.

The risks to the outlook were more favorable than had appeared at their meeting in mid-December.

There were concerns expressed during their discussions about the threat of the coronavirus outbreak in China, and also of tensions in the Middle East.

The Fed staff’s projection for U.S. GDP growth was stronger at the January meeting than in the previous forecast. The staff also said that downside risks had diminished.

There was also some optimism about the outlook for inflation, which has lagged below the Fed’s 2% target.

Most Fed officials said they generally expected inflation to move closer to the central bank’s 2% target.

Despite the optimism, Fed officials were careful not to signal any change in interest rates.

The central bank cut rates three times last year and has signaled an on-hold policy stance, absent significant changes to the outlook.

In their discussion, Fed officials saw good reasons for leaving benchmark rates unchanged.

They discussed about how “maintaining the current policy stance for a time could be helpful in supporting U.S. economic activity in the face of global developments that have been weighing on spending decisions,” the minutes said.

The current degree of accommodation would also be useful in pushing inflation to the 2% target, officials said.

Source: Marketwatch


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