Federal Reserve officials viewed the economy as gaining momentum when they met last month, thanks partly to the Republican tax cuts, according to notes from the monetary policy meeting released Wednesday.
Members of the central bank’s monetary policy committee expected economic growth to remain strong and the labor market to keep improving, and viewed the latest data on consumer and business spending as a sign of “substantial underlying economic momentum.”
Specifically, they pointed to the tax overhaul bill signed by President Trump in December as a reason to be optimistic about the economy over the short term, with the improving global economy and favorable financial conditions. Market turbulence picked up significantly after the meeting, however.
According to the minutes from the meeting, which don’t identify officials by name, a “number” of them saw the initial effects of the tax law as a sign that the tax cuts will have a bigger growth effect than they previously thought.
Others, though, aired doubts that the one-time bonuses being announced by companies in connection with the tax overhaul would actually translate into lasting wage growth.
Wednesday’s minutes reaffirmed what investors were already expecting from the Fed: continued hikes in the central bank’s interest rate target over this year and next. The officials agreed that a “gradual approach” toward raising interest rates would be appropriate, guessing that the continued job growth will translate into higher inflation.
