FOMC Ex­pects Tax Cuts to Give a Boost to Spend­ing

The Bond Buyer - - Market News - — Mar­ket News In­ter­na­tional

Tax re­form strength­ened Fed­eral Re­serve of­fi­cials’ out­look for eco­nomic growth and the la­bor mar­ket as they ex­pect tax cuts to boost con­sumer and busi­ness spend­ing, min­utes of the Fed­eral Open Mar­ket Com­mit­tee’s De­cem­ber meet­ing showed Wed­nes­day.

All but a cou­ple of FOMC mem­bers thought it ap­pro­pri­ate to raise in­ter­est rates to a 1.25% to 1.50% range on Dec. 13, un­der­scor­ing strong sup­port for the move among both vot­ers and non­vot­ers. Two dis­senters, Charles Evans and Neel Kashkari, re­spec­tively of the Chicago Fed and Min­neapo­lis Fed banks, cited be­low-tar­get in­fla­tion as rea­son to wait.

“Most par­tic­i­pants re­it­er­ated their sup­port for con­tin­u­ing a grad­ual ap­proach to rais­ing the tar­get range,” the min­utes said, “not­ing that this ap­proach helped to bal­ance risks to the out­look for eco­nomic ac­tiv­ity and in­fla­tion.”

For now, the FOMC said it gen­er­ally viewed the medium term out­look for in­fla­tion as “lit­tle changed.” It ex­pects to raise rates three times in 2018 and two times each in 2019 and 2020.

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