Federal Reserve policymakers were cautiously optimistic about their ability to h...
WASHINGTON - Federal Reserve policymakers were cautiously optimistic about their ability to hold interest rates steady this year, minutes of the central bank’s last policy meeting showed, even as they acknowledged new risks caused by the coronavirus outbreak.
“Participants generally saw the distribution of risks to the outlook for economic activity as somewhat more favorable than at the previous meeting,” the Fed said in the minutes of the Jan. 28-29 meeting. It went on to say the current stance of monetary policy was likely to remain appropriate “for a time.”
On Tuesday Apple Inc issued a revenue warning due to the disruption the epidemic is causing to its supply chain. China, the world’s second-largest economy, is still struggling to get its manufacturing sector back up and running after imposing severe travel restrictions to contain the flu-like virus.
Despite that Fed officials offered a fairly upbeat assessment of the economy, expecting consumer spending to “likely remain on a firm footing,” job gains to expand at a healthy pace, continued moderate economic expansion and inflation returning to its 2% goal. The Fed is forecasting the economy growing 2.0% this year.
“Most participants expressed concern that introducing a symmetric inflation range...could be misperceived as a signal that the Committee was comfortable with continued misses below its symmetric inflation objective,” the Fed said.Elsewhere in the minutes, Fed policymakers discussed how to handle its growing balance sheet. The Fed has been buying $60 billion monthly of U.S. Treasury bills since October to increase the level of reserves in the banking system in response to a liquidity crunch.
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