Fed minutes reveal debate over inflation and Trump

Author

06 April, 2017

The Federal Reserve is looking to reduce its $4.5 trillion stockpile of government- and mortgage-backed bonds later this year, according to minutes of the March policy meeting released Wednesday.

At the March 14-15 meeting, FOMC members voted at the meeting to raise interest rates a quarter-point while projecting two further rate hikes this year.

The Fed bought Treasury and mortgage-backed bonds on an unprecedented scale in the wake of the financial crisis to help keep interest rates low to spur hiring and growth.

"Provided that the economy continued to perform about as expected, most participants anticipated that gradual increases in the federal funds rate would continue and judged that a change to the Committee's reinvestment policy would likely be appropriate later this year", the Fed said in the minutes.

Trump has promised to lower corporate tax rates and spend at least $1 trillion on infrastructure but has provided little details.

Interestingly, some members of the Fed also noted that seemingly non-economic policies that Trump has thrown around could end up weighing on economic activity.

The minutes said that because of the "substantial uncertainties" about the outlines of the program that might eventually emerge from Congress, about half the Fed officials had included no assumptions about Trump's efforts in their economic forecasts.

Michael Flynn in talks with Congress, wary of prosecution
They centre on the scope of the discussions and what other contact there was between other Trump advisers with the Russians. The House and Senate intelligence committees and the FBI are investigating Russia's meddling in the 2016 election.


Chelsea Clinton Is in No Hurry to Get Into Politics
The younger Clinton said her mother, who was Mr Trump's Democratic opponent in 2016 - is not focused on politics either. Chelsea Clinton was a key campaign figure when her mother ran for president a year ago . "Oh, I have no idea".


USA stock indexes mixed in afternoon trading; oil rebounds
At 11:327 a.m ET, the Toronto Stock Exchange's S&P/TSX composite index was down 11.48 points, or 0.07 per cent, to 15,567.28. For the day, the Dow Jones Industrial Average closed at 20663.22 for a loss of -65.27 points or -0.31%.


Members, however, mostly agreed that any meaningful fiscal stimulus and its effect on the economy would not likely start until the beginning of next year.

The central bank made a decision to raise the federal funds rate for the third time since 2008 in a near unanimous call during its meeting in March. Investors generally see the reduction in the Fed's balance sheet leading to higher rates.

Some at the March meeting pointed out that "core" inflation, excluding volatile food and fuel prices, appeared tame and could take time before settling at or above the target level.

Ian Shepherdson of Pantheon Macroeconomics said the minutes showed policymakers still could not agree on how much slack remained in labor markets. The Fed's dual mandates are to achieve maximum employment and moderate inflation.

"The FOMC minutes were clear that officials are contemplating beginning to address the balance sheet", said Win Thin, an economist at Brown Brothers Harriman.

The development may raise the temperature for the Fed, observers said, with hostile lawmakers in Washington threatening to audit the central bank or take measures some critics say could curtail its independence. The yield on the 10-year Treasury rose to 2.38%, two basis points higher than just before the release.


More news


  • Wenger relieved fans didn't turn on team in draw with City

    Wenger relieved fans didn't turn on team in draw with City

    Far from capitulating as so often in recent years at Arsenal, Theo Walcott wiped out Leroy Sane's City fifth-minute opener. Stewart Robson believes Arsene Wenger's "ego" will keep him at Arsenal following this season to maintain the status quo.

    North Carolina future uncertain after 'Bathroom bill' reset

    Emmert said the NCAA Board of Governors will meet within "the next handful of days" to determine if the ban will be lifted. Sarah Gillooly, policy director of the ACLU of North Carolina, agrees, calling the measure a "disgraceful backroom deal".
    'World's strongest coffee' has almost  5 times average caffeine content

    'World's strongest coffee' has almost 5 times average caffeine content

    It has 58.5 milligrams of caffeine per ounce, nearly three times as much as Starbucks' dark roast . Death Wish said they were "not scared" about the competition from these "new kids on the block".
  • Thousands raised after Kiwi mum and children perish in NSW river tragedy

    Thousands raised after Kiwi mum and children perish in NSW river tragedy

    A mother has died with two of her children as she tried to rescue them after their auto plunged into a swollen river in Australia. King's mother, Heather May King, who lives in Manukau said she would be trying to find flights to Australia on Tuesday afternoon.

    White House says Trump to sign broadband privacy repeal

    Mast defeated Democrat Randy Perkins last November, receiving 54 percent of the vote to succeed Democrat Patrick Murphy. During a floor debate, she said that, "Republicans want this (private) information to be sold without your permission".
    UK seeks to reassure Gibraltar in Brexit talks

    UK seeks to reassure Gibraltar in Brexit talks

    Picardo also said the draft would not change anything regarding "our continued, exclusive British Sovereignty". With over 700,000 Britons in Spain , they too could become bargaining chips as the diplomatic battle rages on.
  • Donald Trump Praises Fox News In Early Morning Tweet

    Donald Trump Praises Fox News In Early Morning Tweet

    Nunes had been aware of the information since January (long before Trump's "wiretap" tweet) but had been unable to view the documents themselves because of "stonewalling" by the agencies in question.

    Games of Thrones Season 7 has a new trailer

    The promo ends with some ice cold breath; either Cersei's been chewing a lot of Ice White gum, or Winter has indeed arrived. To say that fans across the globe are just waiting for the next Game of Throne season to air would be an understatement.

    Dak Prescott celebrates Mississippi State OT upset over UConn

    Vivians had 19 points, William had 13, Richardson had 12 and McCowan finished with 10 for the Bulldogs (34-4). On Sunday, the Lady Bulldogs will attempt to add their name to history against SEC rival SC .
  • APNewsBreak: Yanks drop to 3rd in payroll; Dodgers lead

    APNewsBreak: Yanks drop to 3rd in payroll; Dodgers lead

    Kershaw again dominated the Padres, improving to 15-6 with a 2.03 ERA while limiting hitters to a.191 average in 29 career starts. The two teams are pretty even, and I expect another good battle in 2017 - except with the Giants coming out on top this time.
    MLS review: Schweinsteiger scores on MLS debut

    MLS review: Schweinsteiger scores on MLS debut

    And the 32-year-old said he was "not nervous but just happy to play football" as he returned to the pitch for his first MLS game. Both inch flawless , both putting a teammate through on goal - it was Schweinsteiger doing what he does best.

    Kang shoots 63, sets Houston Open 36-hole record

    Behind Fowler and Kang, former Florence resident Stewart Cink, Jhonattan Vegas and Kyle Stanley all shot 6-under 66. Half of the field in the LPGA Tour's first major of the year was still on the course when play was stopped.