Federal Reserve officials appeared divided into two camps on the inflation outlook, according to minutes of their March meeting released Wednesday. “Several” Fed officials said bottlenecks and strong demand would drive price inflation “more than anticipated,” the minutes said.
At the same time, “several” other Fed officials expressed their belief that the factors that had contributed to low inflation over the past decade “could again put more downward pressure on inflation than expected.” The Fed improved its growth and employment forecast and forecast headline inflation to rise at a rate of 2.4% this year, above the 2% target, but then stabilize at 2.1% by 2023. Despite From these changes, the Fed’s median forecast does not take off for interest rates until 2023. The Fed lowered its policy interest rates to zero last March. The Fed said it would maintain this easy stance until the economy returns to full employment and inflation has risen to 2% and is on track to rise moderately above 2% for some time. At the same time, the Fed is buying $ 80 billion in Treasuries and $ 40 billion in mortgage-backed securities to help the economy. The Fed has said it will continue these purchases until there is “further substantial progress” in reaching its targets of low unemployment and constant inflation. Markets are focused on when the Fed could make an announcement of phasing out asset purchases. The minutes said it would take “some time” for substantial progress to be made. The shares changed shortly after the minutes with the Dow Jones Industrial Average DJIA, -0.04% minus 9 points in afternoon trading.