Leaving interest rates at their current levels is likely to remain appropriate for some time, according to the assessments offered by Federal Reserve officials in the minutes of the central bank’s latest monetary policy meeting.
The minutes of the January meeting, released Wednesday afternoon, made several references to the coronavirus outbreak but are likely to reinforce expectations that the Fed will remain on hold at upcoming meetings.
Meeting participants viewed the current stance of monetary policy as likely to remain appropriate for “a time” as long as incoming data remains consistent with the Fed’s outlook for moderate economic growth.
“Of course, if developments emerged that led to a material reassessment of the outlook, an adjustment to the stance of monetary policy would be appropriate, in order to foster achievement of the Committee’s dual-mandate objectives,” the Fed said.
The minutes said participants concurred that maintaining the current stance of policy would give the Fed time for a fuller assessment of the effects of last year’s interest rate cuts.
Participants also discussed how leaving rates unchanged could be helpful in supporting U.S. economic activity and employment in the face of global developments that have been weighing on spending decisions.
While the minutes reiterated that some trade uncertainties had diminished following the signing of the phase one U.S.-China trade deal, the Fed noted uncertainties about the global outlook remained.
The Fed specifically pointed to uncertainties posed by the outbreak of the coronavirus, which the central bank described as “a new risk to the global growth outlook, which participants agreed warranted close watching.”
CME Group’s FedWatch Tool indicates the Fed is widely expected to leave rates unchanged at its next meetings in March and April, although the chances for a rate cut are seen as rising thereafter.
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