WASHINGTON- A “number” of Fed officials appeared ready to consider changes to monetary policy based on a continued strong economic recovery, according to minutes of the US central bank’s April meeting, but data since then may have already changed the landscape.
“A number of participants suggested that if the economy continued to make rapid progress toward the (policy-setting) Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases,” the minutes said in the most overt reference yet to a possible taper of the Fed’s crisis-fighting bond purchases.
But that view may have suffered a blow this month with the release of data showing job growth was anemic in April. Though inflation ticked higher, also a concern cited in the minutes, the addition of just 266,000 jobs last month provided little further progress towards the Fed’s efforts to nurse the economy back to full employment.
US stocks dropped further into negative territory after the release of the minutes, while the US 10-year Treasury yield rose to 1.683 percent.
Fed officials have pledged to keep their ultra-loose, crisis-fighting policies in place, betting that the unexpected surge in consumer prices last month stems from temporary forces that will ease on their own, and that the US jobs market needs far more time to get people back to work.
But the minutes of the April 27-28 meeting showed the Fed beginning to wrestle with the emerging difficulties of getting the $20 trillion US economy fully reopened after the disruptions caused by the coronavirus pandemic. – Reuters
