Minutes of the Federal Reserve’s January meeting showed officials debated whether increases in borrowing costs might be needed later this year, shedding additional light on the central bank’s pivot away from projecting gradual interest-rate hikes.
“Many participants suggested that it was not yet clear what adjustments to the target range for the federal funds rate may be appropriate later this year,” according to the record of the Federal Open Market Committee’s Jan. 29-30 gathering released Wednesday in Washington.
While several said rate hikes might be necessary “only if inflation outcomes were higher than in their baseline outlook,” several others said that if the economy evolved as expected, higher rates would be appropriate later this year, the minutes said.
The minutes elaborated on the dovish message delivered three weeks ago when the FOMC said it will be “patient,” signaling it had put interest-rate hikes on hold and was prepared to be more flexible on shrinking the balance sheet.
Chairman Jerome Powell underscored the message in his Jan. 30 press conference by saying the Fed would be patient in deciding when and how to adjust policy in the face of a mounting set of risks, including slowing growth in China and Europe, Brexit, trade negotiations and the effects of the five-week U.S. government shutdown. The FOMC unanimously decided to leave the benchmark interest rate unchanged in a range of 2.25% to 2.5%.
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