Many members of the Federal Reserve judged in December that more and faster interest rate increases might be needed in the months ahead, an account of the meeting released Wednesday revealed, thanks partly to the expectation that the incoming Trump administration might oversee tax cuts and spending increases.
A number of Fed officials, described as “many,” worried that the Fed’s current easy-money policies might “stem a potential buildup of inflationary pressures,” the minutes from the meeting read. The minutes don’t identify individual policymakers.
They also debated how to communicate to the public that their plans for raising interest rates as the economy improves might be complicated by uncertainty about what President-elect Trump and the Republican Congress might do in terms of taxes and spending.
About half of the Fed officials marked up their economic forecasts because they expect Trump to ease fiscal policy, either by cutting taxes or pushing through an infrastructure or defense spending program. Even the ones who didn’t forecast faster growth said that the “upside risks” to the outlook were higher because of the possiblity of stimulus from the Trump administration.
The minutes published Wednesday were from the Fed’s Dec. 13 and 14 monetary policy meeting, at which the committee decided to raise its interest rate target by a quarter percentage point, the first increase in a year.
Then, the committee stated that the jobs market has only “somewhat” further to heal. Chairwoman Janet Yellen suggested that the economy is close enough to full health, that stimulus measures, such as government spending programs, are no longer advisable.
