The Federal Reserve of the United States (Fed) has published the minutes of its last monetary meeting on Wednesday. Central bank officials are quite optimistic about America’s economic recovery, so much so that several have been willing to reduce the massive buying of bonds “at some point.”
“Several participants suggested that if the economy continued to move rapidly towards the Objectives of the Committee, it might be appropriate at some point in the next meetings to begin discussing a plan to adjust the pace of asset purchases,” according to minutes of the meeting on April 28.
The April meeting ended the Fed members’ decision to keep interest rates close to zero and they pledged to continue buying $80 billion in Treasury bonds and $40 billion in mortgage-backed securities each month until “substantial progress” has been made in their employment and inflation targets.
Fears of an uptick in inflation have troubled investors in the past two weeks, especially after the CPI soared by 4.2% in April last Wednesday, its biggest rise since 2008.
Although the data has wreaked havoc on the New York Stock Exchange in recent days, it has also been interpreted as a message of calm. Experts believe the Fed will “not panic” with upcoming changes in its monetary policy.
The minutes highlight that supply problems seen with some subjects, such as chips, “may not be resolved quickly, and if so, they could push up prices beyond this year.” Despite this, they keep the long-term target unchanged.
THE ASSESSMENT OF EXPERTS
Oxford Economics experts believe that this “some time” referred to in the minutes could be in August,specifically during the Jackson Hole Economic Symposium. Although the Fed has downplayed the latest increases in inflation since the Fed, the firm believes its stance has changed at the last meeting.
“The meeting preceded recent evidence of rapidly increasing inflationary pressures,including april’s rise in consumer prices, the recent increase in long-term consumer inflation expectations,” they explain in a note.