FOMC Minutes: Economic Activity Expanding Moderately

In the minutes of their March 15 – 16 Federal Open Market Committee (FOMC) meeting, Fed officials showed some concern regarding soft business investment and net exports, but noted that data on economic activity and labor market conditions was “broadly consistent with their earlier expectations.”

Meeting participants were “encouraged” by the growth of consumer spending over the previous quarters, and expect consumer spending to rise moderately due to employment and income gains. Many, however, noted that this strength in household spending would be partially offset by weakness in net exports due to sluggish foreign growth and dollar appreciation.

Participants noted that the labor market had strengthened further during the intermeeting period, and that households’ perceptions of job availability and firms’ assessments of the difficulty of filling jobs had returned to pre-recession levels.

Opinions were mixed on the recent increase in inflation, with some seeing the increase as consistent with a firming trend, while others believed that it was unlikely to be sustained, as it reflected an increase in the prices of volatile goods.

Against this backdrop, all but one member voted to maintain accommodative policy at this meeting. Kansas City Federal Reserve President Esther George voted against this action, believing that a 25 basis point increase was warranted.

Read the FOMC minutes.