Fed policymakers concerned with risks associated with trade tensions – minutes

WASHINGTON, The Federal Reserve said Wednesday that policymakers in the September meeting “generally had become more concerned about risks associated with trade tensions and adverse developments in the geopolitical and global economic spheres.” The minutes from the Federal Reserve’s meeting held on September 17-18 noted that “participants saw trade tensions and concerns about the global outlook as the main factors weighing on business investment, exports, and manufacturing production.” “Participants generally judged that downside risks to the outlook for economic activity had increased somewhat since their July meeting, particularly those stemming from trade policy uncertainty and conditions abroad,” it added.

It affirmed that “in light of weakness in the global economy, perceptions of downside risks to growth, and subdued inflation pressures, some participants continued to view the risks to the outlook for inflation as weighted to the downside.” It indicated that in their discussion of the outlook for inflation, “participants generally agreed that, under appropriate policy, inflation would move up to the Committee’s (Federal Open Market Committee) two percent objective over the medium term.” “Most participants believed that a reduction of 25 basis points in the target range for the federal funds rate would be appropriate,” it added.

“Participants also noted that there continued to be a significant probability of a no-deal Brexit, and that geopolitical tensions had increased in Hong Kong and the Middle East,” it stressed.

“As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric two percent objective,” it affirmed.

According to the minutes, in determining the timing and size of future adjustments to the target range for the federal funds rate, “the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric two percent inflation objective.” It said that “this assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.” The Federal Reserve cut interest rates twice this year amid sharp criticism from President Donald Trump demanding a much larger cut. The Federal Reserve is expected to cut interest rate once again later this month.

Source: Kuwait News Agency