FOMC minutes – Recent events underscore Fed’s cautiousness
Fed’s cautious approach highlights inflation challenges and policy uncertainty amid evolving economic conditions.
Fed officials remain as cautious as before due to the uncertainty around government policies and their net effect on the economy.
Policy developments since the May meeting will have only reinforced the Fed’s wait-and-see approach.
The passage of a major fiscal package by House Republicans raises the risk that inflation becomes somewhat stickier in the medium term.
Amid the Fed’s cautiousness is a lively debate around the timing, magnitude, breadth, and persistence of the coming price shock from the administration’s trade policy.
FOMC participants are reviewing the strategy of flexible average inflation targeting, which it adopted in 2020, and noted the reduced benefits of the approach in the current macroeconomic environment.
