(Updated with details; photo available)
by Howard Schneider and Ann Saphir
WASHINGTON, May 19 (Reuters) – A “number” of US Federal Reserve (Fed) executives have appeared inclined to initiate discussions on changes to central bank monetary policy amid rapid economic recovery , shows the minutes of the April meeting released on Wednesday.
The Federal Open Market Committee (FOMC), in charge of US monetary policy, opted for the status quo on April 28, acknowledging progress in COVID-19 vaccination and economic recovery , while judging that it was too early to reduce his support for the latter.
But several indicators suggesting an acceleration of the rise in prices have since revived, in the financial markets, the fear that the central bank will be forced to tighten its policy more quickly than expected to prevent a sustained inflationary surge.
This scenario notably favored the fall of Wall Street and the rise in yields on government bonds.
“A number of participants suggested that if the economy continues to show rapid progress towards (the FOMC’s) goals, it might be appropriate at some point in upcoming meetings to start discussing a project to adjust. the pace of asset purchases “, is it written in the” minutes “of the Fed.
This is the strongest reference to date indicating a possible change in the measures deployed by the Fed to offset the impact of the coronavirus health crisis, even though data published since may have already changed the context.
The rebound in job creation in the United States suffered a sharp and unexpected braking in April, according to official statistics released earlier this month, pointing out that the Fed’s goal of full employment was still a long way off.
In the wake of the report’s release, Wall Street continued to decline, while yields on 10-year US Treasuries rose.
Fed leaders have promised in the past to maintain their ultra-accommodating policies, believing that the unexpected surge in consumer prices last month is the result of temporary factors that will go away on their own. In their view, the job market also needs more time to get Americans back to work.
But the minutes of last month’s meeting highlight the Fed’s struggles with the challenges accompanying the full reopening of the US economy after the disruption caused by the coronavirus health crisis.
Two central bank leaders were already concerned about a possible rise in inflation to “undesirable levels” before noticing that this was happening and predicting the appropriate response, show the “minutes”.
At the same time, it is written, “many” participants in the April meeting noted the difficulties reported by companies in attracting workers despite high unemployment, a trend that Fed officials believe may be due to a wave of retirements, fears related to the coronavirus and problems related to childcare, in particular.
(French version Marc Angrand and Jean Terzian)
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