Fed Sees No Inflation Risk in Stimulus Policies

Minutes from end-of-April meeting reveal FOMC doesn't see tradeoff between employment and inflation in ongoing stimulus.

Federal Reserve policy makers, weighing options for an eventual exit from extraordinary easing, said continued stimulus to push unemployment lower doesn’t risk sparking an undesirable jump in the inflation rate.

With inflation expected to remain well below its 2 percent goal, the Federal Open Market Committee (FOMC) doesn’t “face a tradeoff between its employment and inflation objectives, and an expansion of aggregate demand would result in further progress relative to both objectives,” according to minutes of their April 29-30 meeting released today in Washington.

“It was noted that the changes to the Committee’s forward guidance at the March FOMC meeting had been well understood by investors,” the minutes showed. “However, a number of participants emphasized the importance of communicating still more clearly about the Committee’s policy intentions as the time of the first increase in the federal funds rate moves closer.”

Fed Chair Janet Yellen testified to lawmakers May 7 that the Fed will probably end bond buying in the fall if the labor market continues to improve. Still, she said, “a high degree of monetary accommodation remains warranted,” with inflation and employment far from the central bank’s goals.

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