US: Outlook for the economy had strengthened – Deutsche Bank

Analysts at Deutsche Bank, note that the FOMC minutes indicated that “all participants agreed that the outlook for the economy beyond the current quarter had strengthened in recent months.”

Key Quotes

“All participants expected inflation on a 12-month basis to move up in coming months”, which should not be too surprising given prior commentaries, but then the minutes also added that “a number of participants indicated….the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected”. Notably, the minutes also indicated that participants discussed the possibility of revising the statement’s language “at some point” to acknowledge that monetary policy “would gradually move from an accommodative stance to being a neutral or restraining factor for economic activity”.

“Elsewhere on trade, “participants did not see the steel tariffs, by themselves….as likely to have a significant effect on the national economic outlook….but a strong majority of participants viewed the prospects of retaliatory trade actions by other countries as a downside risk”.”