Minutes of September FOMC meeting noted that “downside risks to the outlook for economic activity had increased somewhat” since July meeting, particularly those stemming from “trade policy uncertainty and conditions abroad.” And, the minutes warned that the developments “seemed more likely to move in directions that could have significant negative effects on the U.S. economy”.
Domestically, “softness in business investment and manufacturing so far this year was seen as pointing to the possibility of a more substantial slowing in economic growth than the staff projected.” And, “risks to the inflation projection were also viewed as having a downward skew, in part because of the downside risks to the forecast for economic activity”.
Yet, regarding the monetary policy path forward, a few participants judged that “expectations regarding the path of the federal funds rate implied by prices in financial markets were currently suggesting greater provision of accommodation at coming meetings than they saw as appropriate”. And, it might be come necessary to “seek a better alignment of market expectations regarding the policy rate path with policymakers’ own expectations for that path.”
Several participants urged to provide “more clarity about when the recalibration of the level of the policy rate in response to trade uncertainty would likely come to an end.”
