Minutes from the Federal Reserve’s March meeting show that the central bank is discussing the need to slow the U.S. economy down, MarketWatch staffer Greg Robb reports.
This marks the first time since the financial crisis ended that “some” Fed participants are suggesting a change to the policy described as “accommodative” or supporting growth.
The minutes said some participants suggested it might become necessary to revise statement language to acknowledge that “monetary policy eventually would likely gradually move from an accommodative stance to being a neutral or restraining factor for economic activity.”
The Fed estimates that the longer run neutral interest rate is 2.9%. At the March meeting, the Fed raised its benchmark federal-funds rate by a quarter percentage point to between 1.5% and 1.75%. That is the sixth quarter-point move since December 2015.
“The Fed minutes show few doves as the focus turns from lowflation to avoiding overheating,” said Krishna Guha, economist for Evercore ISI. The minutes show that Fed officials were confident that the economy would shrug off its weak first quarter and grow strongly this year.
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