Fed minutes reveal debate over inflation and Trump

Members, however, mostly agreed that any meaningful fiscal stimulus and its effect on the economy would not likely start until the beginning of next year.

With improving economic conditions, the Fed increased interest rates by 25 basis points on March 15.

Minutes from the Fed's March meeting revealed that most policymakers "judged that a change to the committee's reinvestment policy would likely be appropriate later this year".

Interestingly, some members of the Fed also noted that seemingly non-economic policies that Trump has thrown around could end up weighing on economic activity.

The Dow Jones industrial average, S&P 500 index and Nasdaq composite turned negative in late-afternoon trading Wednesday after the Federal Reserve signaled plans to begin unwinding its $4.5 trillion balance sheet.

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Trump has promised to lower corporate tax rates and spend at least $1 trillion on infrastructure but has provided little details.

The minutes showed that Fed officials grappled during their discussions with two big uncertainties facing the US economy: Whether it would be safe to let inflation rise faster for a while and how to assess the effects of President Donald Trump's ambitious economic stimulus plans.

Others felt the Fed had largely met its inflation objective and that "a faster pace of scaling back accommodation" could be warranted.

The minutes showed that the Fed is increasingly encouraged by progress in the global economy, including stronger growth in China and Europe.

At a news conference after the Fed's policymaking committee announced the rate hike in March, Fed chair Janet Yellen emphasize that the committee wants to use changes in the short-term interest rate target as its main tool for influencing monetary policy, not the balance sheet. The Fed's dual mandates are to achieve maximum employment and moderate inflation.

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"At the same time, several participants cautioned that upcoming elections in European Union countries posed both near-term and longer-term risks", the minutes said.

The release of the minutes came a day after the sudden resignation of FOMC member Jeffrey Lacker - the president of the Richmond Federal Reserve Bank - who admitted to a role in the leak of confidential meeting minutes in 2012.

The development will probably raise the temperature for the Fed, observers said, with hostile lawmakers in Washington threatening to audit the Fed or take measures some critics say could curtail its independence.

Among major United States indices, the Nasdaq fell the most at 0.6 per cent after earlier hitting an all-time intraday high earlier in the day.

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