The Federal Reserve might adopt a “more restrictive” policy in the future should inflation persist, minutes from the June Federal Open Market Committee (FOMC) policy meeting revealed (pdf).
According to the latest minutes, FOMC participants conceded that there’s a substantial risk of entrenched inflation, with the inflation outlook deteriorating. This, officials argued, required a three-quarter-point rate increase.
The central bank thinks inflation will remain above 2 percent for quite some time.
On the broader economy, most FOMC members anticipate downside risks to economic growth, warning that the Fed rate boosts may have a larger-than-expected effect on the overall economy.
“Participants concurred that the economic outlook warranted moving to a restrictive stance of policy, and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist,” the minutes stated….