The minutes then described the recovery in GDP as “rapid”.
The meeting featured an in-depth discussion of the economic outlook, with members saying the economy is doing better than expected largely due to tax assistance provided by Washington.
That support is in jeopardy as talks have collapsed between the White House and Congressional Democrats and may not resume until the November election.
“Many participants noted that their economic outlook called for additional budget support and that if future budget support was significantly less or came much later than expected, the pace of the recovery could be slower than expected,” the summary states. the meeting.
Small businesses and farmers have been bolstered by the support, officials said, in an economy that had regained more jobs than expected until August.
As such, “the absence of additional tax support would exacerbate economic hardship in minority and low-income communities,” the minutes read.
As the committee discussed economic conditions, members decided to incorporate recent changes to the Fed’s approach to inflation and what it would take to justify future rate hikes.
Markets are looking for improved future guidance on specific benchmarks that the FOMC would use as criteria. However, members said that the new wording indicating an inflation target above 2% on average for a certain period would be sufficient.
“Most participants supported providing more explicit results-based forward-looking guidance for the federal funds rate, including establishing criteria for raising the federal funds rate above the [current level near zero] in terms of the trajectory of employment, inflation or both, “read the minutes.” However, with long-term interest rates already very low, there does not appear to be a need to improve the forecast at this point, nor to have a lot of outlook advice to put further downward pressure on returns. ”
The Fed had previously expressed its inflation target as “symmetrical,” meaning it would rise above or below the 2% target. MEPs believe the new language makes it more explicit that the Fed is targeting inflation of at least 2%.
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