Federal Reserve divided on strategy and timing of tightening, minutes show
Washington — The Federal Reserve’s consensus about when to shrink its balance sheet and how to approach policy strategy in a time of low inflation is starting to fragment. Fed officials continued to view gradual increases in interest rates as appropriate while starting the process of unwinding their $4.5-trillion balance sheet this year, minutes from their June 13-14 meeting released in Washington on Wednesday showed. But their debate highlighted divisions over the timing of roll-off and unease about recent weak readings on inflation. "They don’t understand why inflation is so low while they are nearing full employment," said Julia Coronado, president of MacroPolicy Perspectives in New York. Chairwoman Janet Yellen is trying to manage a deft exit from unprecedented policy stimulus without roiling bond markets or slowing growth. She is also keeping an eye on inflation as slack in the labour market diminishes in what could prove her final year at the helm of the US central bank. Yelle...
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