Officials at the Federal Reserve are confident enough in the economy to proceed with raising rates again in June but are grappling with the potential fallout of a trade war, according to an account of their most recent meeting.
The notes, released Wednesday, said that Fed officials agreed that “it would likely soon be appropriate” to raise their interest rate target. The next monetary policy meeting is in mid-June.
While the minutes from the meeting suggested that Chairman Jerome Powell and company have a positive view of most aspects of the economy, they do have concerns at the prospect of the Trump administration kicking off a trade war.
Trade disputes were a big topic at the meeting, with Fed officials from all over the country saying that business contacts were worried about them. “Uncertainty surrounding trade issues could damp business sentiment and spending,” the notes read.
Wednesday’s notes were taken at the Fed’s two-day meeting in early May, when officials decided to keep their interest rate target steady.
Before Wednesday, the Fed hadn’t definitively signaled whether the recent changes in the economy would alter its plans for monetary policy over the next year or so. Investors have been speculating that the central bank might pursue tighter monetary policy, speeding up interest rate hikes, because of signs that commerce is accelerating.
In particular, inflation has neared the Fed’s 2 percent target for the first time in a half-decade.
At May’s meeting, according to the notes, at least one person thought it might be “premature” to conclude that inflation will stay at 2 percent, given that the Fed has undershot that target for years.
And someone else brought up the possibility that the Fed should let inflation go a little bit over 2 percent for a while, to compensate for allowing inflation to run below that rate for so long.
