FOMC Expects Tax Cuts to Give a Boost to Spending
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.