U.S. ECONOMICS: FOMC Leans More Hawkish, But Says Downside Risks Remain
Financial market participants read July Federal Open Market Committee meeting minutes as more hawkish than earlier in the year, with increasingly optimistic views on the labor situation dividing members over the strength of the job market. But policy makers still see risks, including "persistent weakness in the housing sector, a continued slow rise in household income, and spillovers" from geopolitical developments.
U.S. stocks are firmer Wednesday afternoon, recovering from the immediate dip seen after release of the July minutes, which some in the market thought could indicate a faster rate-hike timeline. Bond prices were lower, further driving up yields from multi-month lows hit earlier this month. The dollar gained.
Some Fed members saw sufficient economic progress and called for a "relatively prompt move toward reducing policy accommodation." But others felt that even after employment and inflation are running near the Fed's mandate, conditions may warrant keeping the target federal funds rate at extremely loose levels, below what they view as "normal in the longer run."
As inflation moved closer to the longer-run objective of 2%, members viewed inflation risks as "having diminished somewhat."
Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.