Federal Reserve officials approved a patient approach to monetary policy in 2019 during their two-day meeting earlier this month, signaling there will be no interest rate moves in either direction for “some time.”
Minutes from the April 30-May 1 Federal Open Market Committee published Wednesday revealed that even in the face of increased global economic growth or more moderate growth, better financial conditions and moderating global uncertainties, rates will remain steady.
“Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time, especially in an environment of moderate economic growth and muted inflation pressures, even if global economic and financial conditions continued to improve,” the minute summary said.
Policymakers at the U.S. central bank noted that inflation remained well below the Fed’s target range of 2 percent. In March, the Fed’s preferred measure of inflation registered just 1.5 percent, a big reason that policymakers chose to halt interest rate hikes.
Most members thought, however, that the recent low dip in inflation was likely only “transitory.”
While members did not explicitly mention rate cuts or deflation or a shrinking economy, both of which typically precede rate cuts, the minutes said that a few participants “noted that if the economy evolved as they expected, the Committee would likely need to firm the stance of monetary policy to sustain the economic expansion and keep inflation at levels consistent with the Committee’s objective.”
The Fed also sounded a relatively optimistic note on the state of the global economy, easing the language surrounding global uncertainties, such as Brexit and the U.S.-China trade war — both of which prompted policymakers in January to vote to keep the benchmark federal funds rate unchanged in the near-term.
“In their consideration of the economic outlook, members noted that financial conditions had improved since the turn of the year, and many uncertainties affecting the U.S. and global economic outlooks had receded, though some risks remained,” the minutes said.