US Federal Reserve officials all agreed that the world’s largest economy would firm further and that inflation would rise in the coming months, minutes of the central bank’s last policy meeting showed.
According to the minutes released on Wednesday of the March 20-21 meeting, at which the Fed unanimously voted to raise borrowing costs by a quarter percentage point, policymakers were unanimous in their view that the economic outlook has become brighter.
“All participants agreed that the outlook for the economy beyond the current quarter had strengthened in recent months,” the Fed said in the minutes, Reuters reports.
“In addition, all participants expected inflation on a 12-month basis to move up in coming months.”
The Fed’s target range for its benchmark lending rate is currently between 1.50 and 1.75 percent. The increase in March was the sixth rise since the central bank began a tightening cycle back in December 2015.
As the economy has strengthened, the Fed has stepped up the pace of hikes. It sees another two rate rises this year, although quarterly forecasts at the last meeting showed more officials than in December were supportive of three more hikes in 2018, the report said.
The Fed’s preferred measure of inflation currently sits at 1.6 percent and has undershot its 2 percent target rate for six years but various indicators have recently pointed to an uptick in price pressures, Reuters noted.
Fed Chairman Jerome Powell said last Friday that the central bank would likely need to keep raising rates to keep inflation under control, but also pledged to stick to a gradual path.
However, the meeting minutes showed that already some Fed officials worried the central bank would have to move faster than previously expected.
Several thought it would likely also become appropriate at some point for interest rates to rise above the Fed’s longer-run estimate for a time.
The readout of the March meeting, however, showed that policymakers were wary about the impact of the Trump administration’s trade and fiscal policies.
The Fed is expected to keep rates unchanged at its next policy meeting on May 1-2, but investors overwhelmingly see another rate increase at the following one in mid-June.
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