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The minutes of the Federal Reserve’s monetary policy steering committee meeting, held June 15-16, showed Fed officials were not ready to announce a plan to cut purchases of assets, given the high degree of uncertainty over who were ready to save Plan in case they had to move sooner.
The minutes say that U.S. central bank officials expressed their belief that there was not much further progress towards economic recovery, but agreed that they should be prepared to act if inflation or other risks materialized.
The minutes of the meeting, which were released on Wednesday, say attendees agreed inflation has risen more than expected, but felt the price increase largely reflects temporary factors.
Participants at the meeting also expected inflation to fall back to the target level of 2% in the long run.
The Fed also expects to hike the interest rate twice during 2023, in light of lingering expectations that the economy will recover from the repercussions of the pandemic.
The minutes added that “several participants” at the meeting still believe that the terms of the reduction in asset purchases “will be reached sooner than expected.”
But others saw a less clear signal in the incoming data, warning of reopening the economy after a pandemic that has left an unusual level of uncertainty and requires a “patient” approach to any policy change.
The minutes of the meeting indicated that a “large majority” of Fed officials saw inflation risks “on the upside”, and that the Fed as a whole believed it should be able to ‘act if these risks materialize.
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