Summary of some of the steps already taken for the process of further normalization of the monetary policy. The developments in the financial and open market operations committee desks reversed the repurchase agreement since it was an avenue for providing soft floor for market interests money.
On the System open market account reinvestment policy majority of the committee members favoured continuous re-investment on the beginning of the normalization because of its consistence and reliability in increasing the target range for the federal funds. Also the policy was best suitable in winding down the re-investment and consequently smoothening of the declining balance sheet.
A member suggesting that amendment be made on the summary of the economic projection such that it best suits the public through provision of available informations. The subcommittee proposal on the publication of the median values and removal of the histograms was anonymously accepted by the committee members. The participants argue that median inclusion will provide a clear view on the measure of distribution. Other raised issue of concern was future addition of graphs for future projections of uncertainty.
Staff review of the economic situation.
From the committee previous minute the gross domestic product was relatively raising in the second quarter with continuous market improvement. The inflation rate was at 2% and it was the lowest as a result of the decline in the oil prices and the continuous decline in the importation of the non-energy products. On the other hand unemployment rate reduced while those employed as part time declined this directly leads to the decrease in the ratios between the labor force and the employment reduced drastically. This decline was witnessed in mining which had a greater effect in the fast quarter growth output but subsequently reduced, personal consumption expenditure grew towards the second quarter and Housing sector. This suggests that the labor was under-utilized in the beginning of the year.
Staff review financial situation
The staff provide the latest report on the potential risks of the financial stability of U.S. According to the staff the following factors contributes to financial stability; strong capital position, stability in the level of maturity transformation by financial institutions and the moderate rates of borrowing. Contrary huge and rising burdens, and the reduction of the lending rates are the areas of growing concern.
Staff economic outlook
The real GDP expected to raise faster than for the proceeding years (2016/17) even if the normalization stance of the monetary policy was continuing. Changes made by the staff include; trimming of the rates of productivity projected and lowering of the estimates of future unemployment rates. The forecast on inflation was looked into and revised to suit near value as a result of the decrease in crude oil prices.
Participants view on the current conditions and the economic outlook
According to the information provided to the participants there is a general believe that the economy is growing. This growth has started picking up in the previous months that are not in the first quarter. Also there participants anticipates a significant rise in inflation to 2% as the market labor improves. Recovery in the housing sector also is anticipated by the participants, there view also is that the risks from both financial and fiscal challenges from Greece will disappear.
Committee policy action
According to the discussion by the policy action committee information obtained from the previous FOMC indicates a moderate expansion of economic activities. This according to the members is attributed to appropriate monetary accommodation policy. On economic condition the committee commend on the fading under-utilization of available labor. On inflation the committee, the inflation is running below their set objectives.
In their conclusion the committee said that there was further progress and that the economic condition warranting an increase in the target range for funds of the federal had not be achieved yet. Target rate for the fund was agreed to be maintained along with the policy of reinvesting principal payments from the agency debt. In conclusion Federal Reserve Bank of New York was voted and authorized for executions of transactions
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