The Federal Reserve intends to press ahead with interest rate hikes despite mounting concerns about a possible trade war, according to the minutes of the Fed’s June meeting.
At that meeting, the Fed raised rates and projected four rate increases in 2018 instead of three previously planned. The central bank, however, maintained its outlook for three rate hikes in 2019.
“Negative risks to economy from U.S. trade policy have intensified,” the minutes showed.
Still, “The information reviewed for the June 12-13 meeting indicated that labor market conditions continued to strengthen in recent months, and that real gross domestic product (GDP) appeared to be rising at a solid rate in the first half of the year.”
Regarding the Trump Administration’s tax breaks, participants generally continued to see recent fiscal policy changes as supportive of economic growth over the next few years, and a few indicated that fiscal policy posed an upside risk.
They judged that continuing along a path of gradual policy firming would balance the risk of moving too quickly, which could leave inflation short of a sustained return to the Committee’s symmetric goal, against the risk of moving too slowly, which could lead to a buildup of inflation pressures or material financial imbalances.