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FOMC minutes reflect stable rates despite coronavirus threat
Members of the Federal Open Market Committee (FOMC) – the Federal Reserve's monetary policy-setting arm – agreed that the labor market had remained strong since the last meeting with economic activity rising at a moderate rate, according to minutes from the committee's January meeting.
"The committee reaffirmed that the current Fed funds target rate is likely to persist for the near future," said NAFCU Chief Economist and Vice President Curt Long. "The coronavirus received only modest attention during the January meeting, but given the sizable disruption to China's economy and the potential for spillovers to other countries, it clearly represents the biggest threat to a stable rate outlook."
Additionally, several members observed that equity and commercial real estate valuations were elevated and drew attention to high levels of corporate debt and weak underwriting standards in leveraged loan markets.
Minutes released Wednesday also revealed that participants:
- viewed the current stance of policy as likely to remain appropriate for a time, providing that future economic information remained broadly consistent with this economic outlook;
- were cautiously optimistic about the effects of recent favorable trade developments and the signs of stabilization in global growth on the business sector; and
- observed that business investment and exports remained weak, with manufacturing output declining over the past year.
The FOMC will next meet March 17-18; its tentative meeting schedule for 2020 can be viewed here.