The Fed said officials “pointed to a variety of considerations that supported a patient approach to monetary policy,” including the need for additional economic data, which would help policymakers better gauge business and consumer sentiment. The Fed also said participants saw “few risks” to pausing and that being patient would allow more time to determine the effect of President Trump’s trade war with China and other countries and the economic damage from the prolonged government shutdown, which had not been resolved at the time of the Fed’s January meeting. “Information arriving in coming months could also shed light on the effects of the recent partial federal government shutdown on the U.S. economy and on the results of the budget negotiations occurring in the wake of the shutdown, including the possible implications for the path of fiscal policy,” the minutes said. Officials worried in particular that investors did not have a clear picture of how the Fed planned to deal with the slimming of the bond portfolio it amassed in the wake of the financial crisis, as part of its effort to lower borrowing costs and boost the economy. They agreed that “it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year” and said the announcement “would provide more certainty about the process for completing the normalization of the size of the Federal Reserve’s balance sheet.”Fed officials also acknowledged the volatility that had gripped equity markets after the Fed’s December rate hike.

Source: New York Times February 20, 2019 19:34 UTC