WASHINGTON (MNI) – The following is an excerpt from the minutes of
the Federal Open Market Committee’s monetary policy meeting June 22-23,
released Wednesday:

Committee Policy Action

In their discussion of monetary policy for the period ahead,
members agreed that it would be appropriate to maintain the target range
of 0 to 1/4 percent for the federal funds rate. The economic outlook had
softened somewhat and a number of members saw the risks to the outlook
as having shifted to the downside. Nonetheless, all saw the economic
expansion as likely to be strong enough to continue raising resource
utilization, albeit more slowly than they had previously anticipated.

In addition, they saw inflation as likely to stabilize near recent
low readings in coming quarters and then gradually rise toward more
desirable levels. In sum, the changes to the outlook were viewed as
relatively modest and as not warranting policy accommodation beyond that
already in place.

However, members noted that in addition to continuing to develop
and test instruments to exit from the period of unusually accommodative
monetary policy, the Committee would need to consider whether further
policy stimulus might become appropriate if the outlook were to worsen
appreciably.

Given the slightly softer cast of recent data and the shift to less
accommodative financial conditions, members agreed that some changes to
the statement’s characterization of the economic and financial situation
were necessary.

Nearly all members judged that it was appropriate to reiterate the
expectation that economic conditions — including low levels of resource
utilization, subdued inflation trends, and stable inflation expectations
— were likely to warrant exceptionally low levels of the federal funds
rate for an extended period. One member, however, believed that
continuing to communicate an expectation in the Committee’s statement
that the federal funds rate would remain at an exceptionally low level
for an extended period would create conditions that could lead to
macroeconomic and financial imbalances.

** Market News International Washington Bureau: 202-371-2121 **

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