• The minutes from FOMC’s April 30th-May 1st meeting reiterated the Committee’s commitment to patient monetary policy. It noted that although uncertainty around the outlook had moderated and global economic and financial conditions continued to improve, inflationary pressures remained muted, warranting patience.
  • Participants observed the near-term boost in growth might be short-lived as dissipating fiscal stimulus and past interest rate hikes weigh on activity. However, growth should remain solid due to the strong labor market, improved consumer confidence and financial conditions. It should be noted, however, that during the time of the meeting there were reports that trade negotiations between U.S. and China were nearing an end. Negotiations have since soured, with both sides now reportedly nowhere near striking a deal.
  • A lengthy discussion on inflation was undertaken as participants explored the muted nature of price pressures in the economy. Some participants expressed the opinion that inflation could pick-up quickly as capacity constraints are met, while others noted that given persistently low inflation, there was a risk that inflation expectations can become anchored at levels below the two percent target.

Key Implications

  • The Committee’s affinity for patience was on display yet again in the FOMC minutes. Participants were clear that they would continue to watch the evolution of the data in setting monetary policy. However, the upside and downside discussion on inflation risks was a clear sign that they are not just viewing a one-track mindset for monetary policy, rather there is a case to be made for decisions in either direction.
  • The participants discussion on the growth outlook has been clouded somewhat by the fast-moving, turbulent nature of the U.S. and China trade negotiations. Where participants expressed views of improving business sentiment and the reduction of uncertainty, the recent escalation in trade tensions may prompt participants to reassess their views in the next meeting.


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