Minutes from the Federal Reserve's December meeting show that policymakers are uncertain about the impact of President-elect Trump's policies on inflation. The minutes also indicate that the Fed may slow the pace of interest rate cuts going forward.
The Federal Reserve 's policymaking arm on Wednesday released the minutes of its most recent meeting in which central bank officials noted that the uncertainty surrounding how President-elect Trump's policies will be implemented is weighing on their outlook for inflation.
The Federal Open Market Committee (FOMC) is tasked with making decisions about monetary policy and consists of a rotating group of regional Federal Reserve Bank presidents who set the central bank's target range for the benchmark federal funds rate. Minutes from the Fed's meeting in December, where policymakers lowered rates by 25 basis points to a range of 4.25% to 4.5%, showed uncertainty among FOMC members about the direction of economic conditions as well as future public policy shifts. Fed Chair Jerome Powell noted that the cut was a 'closer call' because of stubborn inflation and the labor market softening, adding that the Fed may look to slow the pace of interest rate adjustments going forward. 'With regard to the outlook for inflation, participants expected that inflation would continue to move toward 2 percent, although they noted that recent higher-than-expected readings on inflation, and the effects of potential changes in trade and immigration policy, suggested that the process could take longer than previously anticipated,' the FOMC minutes said. The minutes added that several participants noted the process of disinflation may have stalled, or that there is a risk it could stall, leaving inflation above the Fed's 2% target. The most recent consumer price index (CPI) reading came in at 2.7%, while the Fed's preferred inflation gauge, known as the personal consumption expenditures (PCE) index, was 2.4%
Federal Reserve Inflation Monetary Policy Economic Uncertainty Trump Policies
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