Fed minutes likely to anchor 'careful' monetary policy approach
By Howard Schneider
WASHINGTON (Reuters) -Federal Reserve Chair Jerome Powell made liberal use of the word «careful» at his last press conference as he described the U.S. central bank's effort to balance the risks of still-elevated inflation and a surprise surge in economic growth against tightening credit conditions and a Fed conviction that the economy was on the cusp of slowing.
Minutes of that Oct. 31-Nov. 1 meeting, which are due to be released at 2 p.m. EST (1900 GMT) on Tuesday, are expected to also emphasize a word U.S. monetary policymakers have rallied around at a time when they seem unlikely to raise the target interest rate any further, yet don't want to say so while inflation remains well above the central bank's 2% target.
«Inflation has given us a few head fakes. If it becomes appropriate to tighten policy further, we will not hesitate to do so,» Powell said at an International Monetary Fund research conference earlier this month. «We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data, and the risk of over-tightening.»
But there's also an increasing sense the Fed may be on the verge of pulling off the unexpected by navigating out of the worst inflationary surge in 40 years without doing major damage to the economy.
A New York Fed staff study released on Tuesday, the product of a large general model of the economy, suggested in fact that the U.S. central bank's late start in raising interest rates, with the first hike coming a year after prices began a sharp rise, has allowed the economy to bank more growth with the same progress on lowering inflation than would have been the case if rate increases had started sooner.
The delayed
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