FOMC: Further gradual policy firming would be appropriate – Deutsche Bank

According to analysts at Deutsche Bank, the FOMC minutes indicated that “a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate”.

Key Quotes

“On the economy, it noted that “a number of participants indicated that they had marked up their forecasts for economic growth in the near term relative to …the December meeting” and that “several others suggested that the upside risks to the near-term outlook for economic activity may have increased.” On inflation,"almost all participants who commented agreed that a Phillips curve type inflation framework remained useful…”. Elsewhere, some participants said that they saw an appreciable risk that inflation would continue to fall short of the Fed’s objective, but overall inflation is expected to “move up” this year and stabilise around 2% over the medium term. On wage gains, “a number of participants judged that the continued tightening in labour markets was likely to translate into faster wage increases at some point”.”