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by Jason Lange
WASHINGTON (Reuters) – The Federal Reserve's monetary policy committee (FOMC) spoke of a recession and expressed concern that international trade tensions might affect an economy that, in light of Most of the indicators, however, appear solid, according to the minutes of the monetary policy meeting of June 12 and 13, published on Thursday.
During this meeting, the central bank raised rates for the second time this year and, reading the "minutes", it seems that its officials could soon announce that the monetary tightening cycle is sufficiently advanced for monetary policy to have reached the stage where it neither slows nor stimulates the economy.
The report generally leaves the impression of a Fed impressed by the strength of the US economy, which is evolving according to its expectations, and persuaded of the accuracy of its choice to pursue the e cycle of rate hikes; but it also pays attention to what could distort the upward trajectory of the economy.
"Most (members of the Fed) have observed that the uncertainty and risks badociated with trade policy have increased and expressed concern that such uncertainty and such risks can not eventually have negative effects, "reads the minutes.
Many of the contacts of the issuing institute have said they fear that the recent rise in tariffs in the United States and among its trading partners weighs on investment.
"The trade threat is the primary risk factor, so Fed officials will see how it affects companies, "said Putri Pascualy, portfolio manager for Pacific Alternative Asset Management.
Wall Street reduced its gains after the publication of the report, which had been fueled by a certain optimism about the possibility of an arrangement between Europe and the United States on the record of the the dollar has increased its losses against a basket of reference currencies.
Fed officials have also wondered whether the narrow yield gap between long and short interest rates could be interpreted as a sign of a recession waiting for its time
"A number of participants thought it would be important to continue to monitor the slope of the yield curve," reads the minutes. [19659002TheFOMChasalsobeeninterestedinanotherpotentialindicatorofrecession:thegapbetweenthecurrentFedfundsrateandtheoneexpectedseveralquarterslateronthebasisoffuturemarkettrends
This indicator may rest on more reliable information than the yield curve, likely to be distorted by ad-hoc elements, estimates the Fomc.
The report does not say if the officials of the Fed have judged if one or the other of these two indicators did anticipate a recession.
(Wilfrid Exbrayat for the French Service, edited by Jean-Michel Belot)
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