Federal Reserve officials believe that their patient approach to interest-rate changes is likely to be appropriate “for some time” — despite pressure from President Trump to lower rates to expedite growth.
That’s the takeaway from the minutes released Wednesday of the Federal Open Market Committee’s April 30 to May 1 meeting, during which the committee left its benchmark policy rate unchanged at a 2.25% to 2.5% target range.
The president has been pressuring the Federal Reserve to lower interest rates and even tweeted while the meeting was underway that the benchmark federal funds rate should be cut by a point.
That view contradicts many economists who say the economy is expanding at a healthy pace and this is not the time to be taking such actions, a line of thinking that was dominant at the meeting of Fed officials.
“Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time,” the minutes said.
The minutes reinforced the message from Fed Chairman Jerome H. Powell’s post-meeting news conference, at which he said there wasn’t a strong case to move interest rates in either direction. He also said a sharp rise in corporate debt was being monitored but did not appear to pose the type of threat that triggered the 2008 financial crisis.
The minutes also showed officials becoming more optimistic about this year’s U.S. economic outlook — but that was before Trump raised tariffs on Chinese imports.
Many officials at the meeting also viewed the recent easing in inflation “as likely to be transitory” and that the the Fed’s approach to interest rates “was likely to be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the committee’s symmetric 2% objective.”
The Fed’s preferred gauge of price pressures, excluding food and energy, slowed to a 1.6% increase in the 12 months through March despite solid economic growth and a tight labor market.
Investors have been betting the Fed will cut interest rates later this year partly on concern over inflation running persistently below its 2% target, which prices have done for most of the last seven years.
On the economic outlook, “many participants suggested that their own concerns from earlier in the year about downside risks from slowing global economic growth and the deterioration in financial conditions or similar concerns expressed by their business contacts had abated,” according to the minutes.
GDP expanded at a 3.2% annual pace in the first quarter, surpassing expectations, and unemployment hit a 49-year low in April. The U.S. expansion is on track to become the longest on record in July.
The committee next gathers June 18 and 19.
Times staff writer Laurence Darmiento contributed to this story.