The sentences are shared among Fedledamöterna about when it may be time to initiate a drawdown of the balance sheet, and thus, opinions are divided on the outlook for inflation and how it will affect future rate increases.
It is clear from the minutes of the Fed’s policykommitté the FOMC’s meeting on 13 and 14 march, when ränteintervallet was raised by 0.25 percentage points, to 1.00-1.25%, writes Bloomberg News.
Several Fed members had desired that the process of reducing the balance sheet would commence within a few months, while others wanted to wait until later in the year in anticipation of economic changes.
Members who wanted to see an earlier reduction of the balance sheet stated that the committee’s communications have prepared the public of such action. Second, who wants to wait to initiate the drawdown to later in the year, pointed out that it would provide additional time to evaluate the outlook for economic activity and inflation.
It was also pointed out that a rapid change in the reinvesteringspolicyn could be misinterpreted as a signal that the committee is shifting towards a less gradual approach to the policynormaliseringen overall.
The minutes also showed that the majority of the members of the recent weakness in the price data mainly reflects temporary factors, such as the reduction of prices for mobile telephony and prescription drugs, and that this does not mean much for the prospects for inflation in the medium term.
Several board members expressed concern, however, in order to progress towards the inflation target, 2 percent, may have slowed and that the recent weaknesses in the rate of inflation can be persistent.
Some board members expressed concern that a decline in the unemployment rate, to levels well below what is considered to be sustainable in the long term, can entail risks for financial instability or a sharp increase in inflation, which can require a quick policyåtstramning, which, in turn, can lead to a decline in the economy.
These members noted that financial conditions, according to some measure, had eased up despite the fact that the Fed started to reduce on the policyackommoderingen, and that market participants continued to expect further steps to tighten policy.
Some members also noted that even if the company profits are growing strongly as is the valuation of the stock market high in relation to normal models.
Some members further noted that the increased risk tolerance among investors can contribute to elevated asset prices more generally. A few members feared that the subdued volatility in the markets, combined with low risk premiums, can lead to increased risks to financial stability.
According to the members ‘ assessment should, however, the effects on the financial conditions of a possible notice to the normalisation of the Fed’s balance sheet should be initiated in should be limited.
Tradingportalen/Agency Directly.
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