WASHINGTON–Minutes released from the Federal Open Market Committee (FOMC) meeting in mid-June show increasing concern among some officials that the Fed may be forced to hike rates or pare back bond purchases sooner than they had projected.
Before adjourning the meeting, Fed officials voted unanimously to once again keep the baseline interest range at 0% to 0.25% and further indicated the Fed will continue to purchase $120 billion combined in Treasury bonds and mortgage-backed securities until the economy shows "substantial further progress" toward a full recovery.
But the minutes also show a debate heating up among some Fed officials over how soon they would have to begin easing that support or whether the economy would continue to keep up its current pace.
As CUToday.info reported here, various Fed Bank officials have also been debating the future of inflation and interest rates.
"A substantial majority of participants judged that the risks to their inflation projections were tilted to the upside," the minutes read.
Those minutes indicate those officials cited concerns about supply chain disruptions, which have pushed prices for many goods higher, and hiring troubles among many industries hit hard by the pandemic, including leisure, hospitality and manufacturing.
‘Be Patient’
But other FOMC members countered that the supply shortages and short-term factors pushing inflation higher could phase out even sooner than expected, making it too soon to accelerate tapering.
"Several of these participants emphasized that the Committee should be patient in assessing progress toward its goals and in announcing changes to its plans for asset purchases," the minutes read.
As CUToday.info reported earlier, no Fed official expects to see a rate increase put in place until 2022 at the earliest.
The median projection of annual inflation among Fed officials rose from 2.4% in March to 3.4%, but both Fed leaders and staff economists expect inflation to fall back toward 2% in the following years, which is the Fed’s target inflation rate.
The Fed minutes can be found here.