FOMC Minutes: Policymakers agreed a fall in longer-term inflation expectations would be undesirable

The minutes from the July (25th & 26th) Federal Reserve’s monetary policy meeting have been published, stating that policymakers agreed a fall in longer-term inflation expectations would be undesirable.

Key headlines (via Reuters):

• Policymakers held wide-ranging debates over inflation outlook, stock prices and financial stability - July 25-26 policy meeting minutes
• Some policymakers were prepared to announce at July 25-26 meeting a starting date for winding down of balance sheet - minutes
• Some voting policymakers said further interest rate hikes should wait until there were signs inflation would rise to Fed's 2 pct target
• Voting policymakers were concerned about slowdown in inflation and agreed to monitor prices closely
• Policymakers disagreed on whether inflation expectations were well-anchored
• Most policymakers expected inflation to pick up in next few years, but many saw rising chances of inflation remaining below target
• Several policymakers noted rising stock prices had eased financial conditions
• Policymakers had differing views on whether high stock prices were of consequence for monetary policy
• A couple policymakers said high stock prices might not pose big risks to financial stability
• Policymakers judged it was important to look for signs of declining market volatility or concentration of investors in particular assets
• A couple policymakers saw pace of price gains in multi-family real estate and lending activity of certain government-sponsored firms as possible sources of financial instability
• Policymakers agreed it would be undesirable for current financial regulation framework to change to allow reemergence of past risky practices
• Several policymakers said uncertainty over federal fiscal, trade and healthcare policies was reducing company spending and hiring plans
• A few policymakers said likelihood of near-term fiscal stimulus had fallen further