The Federal Open Market Committee (FOMC) minutes indicated a near-unanimous consensus among policymakers regarding the risk of elevated inflation coupled with decelerated economic expansion in the United States. The minutes acknowledged potential “difficult tradeoffs” for the Federal Reserve.
Key observations included unanimous agreement to maintain current interest rates due to prevailing economic uncertainties. Participants cited the uncertain impact of governmental policies as justification for a cautious approach. A majority acknowledged the potential for inflationary pressures to persist beyond current projections. The FOMC deemed itself adequately positioned to await further clarity on the economic outlook.
Almost all participants perceived upside risks to inflation and downside risks to employment. Several members highlighted potential challenges should inflation prove more persistent amidst weakening growth and employment prospects. Nearly all participants favored decelerating the balance sheet runoff, although dissenting views were expressed. A few members cautioned against the potential for abrupt risk repricing in financial markets to amplify negative economic shocks.
Federal Reserve staff projections for real GDP growth were revised downward compared to the January meeting. The minutes pertain to the March 18-19 FOMC meeting, during which the Federal Funds Target Range (FFTR) remained unchanged at 4.25%-4.50%. The Summary of Economic Projections (SEP) update reflected a discernible sense of uncertainty within the FOMC.
