*DJ FOMC Minutes: GDP To Pick Up From 3Q Pace In '07, '08
*DJ FOMC: GDP To Grow Near Or Slightly Below Potential
*DJ FOMC: Core Inflation To 'Edge Down' In '07, '08 Vs 2H 06
*DJ FOMC: 'Drew Some Comfort' From Recent Housing Data
*DJ FOMC: Core Inflation Still 'Uncomfortably High'
*DJ FOMC: Recent Data Have Allayed Some Inflation Fears
*DJ FOMC: Downside Econ Risks Have Diminished 'A Little'
*DJ FOMC: Inflation Risks Subsiding 'Albeit Only Slightly'
*DJ FOMC: Upcoming Data Will Help Refine Dec Policy Stance
DJ FOMC Minutes:Downside Econ Risks Have Diminished 'A Little'
By Brian Blackstone
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--A cautiously optimistic Federal Reserve reasoned last month that risks to both economic growth and inflation had diminished slightly since its prior meeting, an indication that officials are increasingly comfortable with the current steady stance of policy, according to Fed policymakers' Oct. 24-25 meeting minutes released Wednesday.
However, optimism on economic growth seemed the more widespread view, and officials continued to emphasize that higher inflation "remained of greatest concern," which should dampen hopes of any reduction in interest rates in coming months, according to the Federal Open Market Committee minutes, released after a customary three-week lag.
"Most members judged that the downside risks to economic activity had diminished a little, and likewise, some members felt that the upside risks to inflation had declined, albeit only slightly," the Fed said in the minutes.
At its October meeting, officials left the federal funds rate unchanged at 5.25% for a third-straight meeting but maintained a tightening bias should inflation persist.
An statement accompanying the FOMC decision said the economy "seems likely to expand at a moderate pace," a new phrase that quelled hopes of a near-term ease in monetary policy. Many analysts now expect a lengthy period of policy stability well into 2007.
In the October minutes, officials said the economy should expand "close to or a little below" its noninflationary potential in coming quarters.
Recent data support the status quo on rates. The jobless rate tumbled last month to a five-and-a-half year low of 4.4%, suggesting that some inflationary risks remain from a tight jobs market. But a record drop in wholesale prices in October highlighted that the decline in energy prices since the summer is having a rapid disinflationary impact.
Officials last month also signaled that upcoming data could have a big impact on their policy stance next month.
"Members noted that a significant amount of data would be published before the next committee meeting in December, giving the committee ample scope to refine its assessment of the economic outlook before judging whether any additional firming was needed to address those risks," the minutes stated. |
