The Fed isn't sweating inflation ... yet

Inflation may be creeping higher. But the Federal Reserve isn't worried about it -- yet.After years of stubbor...

Posted: May 23, 2018 9:34 PM
Updated: May 23, 2018 9:34 PM

Inflation may be creeping higher. But the Federal Reserve isn't worried about it -- yet.

After years of stubbornly low inflation, some Fed officials signaled they would be more than comfortable if their preferred price-growth gauge is "modestly" above its 2% target "for a time," according to minutes of their May meeting released Wednesday.

So far, the Fed hasn't defined how much of an overshoot in inflation they would tolerate -- or for how long.

"A temporary period of inflation modestly above 2% would be consistent with the committee's symmetric inflation objective," according to the minutes.

The Fed is trying to strike a careful balance: It wants to raise interest rates steadily to keep the economy from overheating, but raising rates too quickly could help start a recession.

The US central bank, under Chairman Jerome Powell, left interest rates unchanged in May, while signaling growing confidence that inflation is inching closer to its goal.

Several participants at the May meeting suggested that the recent uptick in inflation was due to "transitory price changes" in health care and financial services. The Fed has made clear its goal is to meet its 2% target on a "sustained basis."

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Fed officials did however send a reassuring message to investors.

Minutes of the meeting show policy makers suggesting the central bank would "likely soon" take another step in raising raises if the economy continues on its glide path. Economists expect the Fed to nudge rates higher in June.

"Participants generally agreed with the assessment that continuing to raise the target range for the federal funds rate gradually would likely to be appropriate if the economy evolves about as expected," according to the minutes.

But policy makers were still undecided how often it would need to raise rate this year. The Fed has signaled it would raise rates three times this year.

Fed officials, according to the minutes, aired a range of views over how quickly to lift interest rates over the medium term to meet its objectives. They also debated whether it would soon be appropriate to revise their post-meeting statement as they press ahead in raising rates.

Despite the rosy outlook, minutes of the May meeting also showed that policymakers raised a number of concerns over the future of economy because of the possibility of a tit-for-tat trade war and the impact of tax cuts.

A number of Fed officials suggested that uncertainty surrounding trade issues could dampen business sentiment and spending. While a few others noted that US inflation could grow if global oil prices remain high.

Fed officials deliberated their May rate hike decision just as the Trump administration was negotiating with China on a variety of trade issues.

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 93556

Reported Deaths: 2810
CountyConfirmedDeaths
Hinds6974155
DeSoto541155
Harrison373272
Jackson338867
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Rankin319075
Lee260667
Jones242078
Forrest239070
Washington217971
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Lamar163134
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Lowndes139957
Warren138150
Leflore136980
Pontotoc123416
Pike121248
Monroe118865
Scott116425
Copiah116233
Coahoma112327
Holmes109258
Marshall107615
Lincoln106753
Grenada106135
Yazoo103829
Simpson101143
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Tate95137
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Wayne87721
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George74913
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Tippah64216
Attala64125
Walthall59325
Clay57817
Hancock56121
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Noxubee54315
Clarke53539
Smith52314
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Tunica47913
Montgomery45520
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Wilkinson30217
Kemper28615
Sharkey26312
Jefferson2429
Benton2191
Franklin1893
Choctaw1795
Issaquena1033
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Alabama Coronavirus Cases

Confirmed Cases: 131405

Reported Deaths: 2292
CountyConfirmedDeaths
Jefferson19015337
Mobile13066289
Montgomery8674173
Madison758375
Tuscaloosa7240114
Lee571359
Shelby568450
Baldwin506149
Marshall383543
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Autauga169024
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Chilton148527
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Chambers113042
Clarke104917
Marion94228
Butler90938
Barbour8357
Winston70912
Marengo69919
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Randolph60812
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Washington54613
Clay5427
Perry5376
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