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Fed Minutes: Economy remains far from FOMC goals

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Yahoo Finance’s Brian Cheung reports the latest released Fed minutes.

Video Transcript

KRISTIN MYERS: I want to go to Yahoo Finance's Brian Cheung now because all eyes have been on inflation, what the Fed might be doing, how they might be thinking. Brian, what comes from the latest Fed minutes?

BRIAN CHEUNG: Well, the minutes just dropped about 15 minutes ago. This covers the policy setting meeting from the Central Bank on April 28. So that was, to be fair, before that April jobs report, which we got on that first Friday in May. But as of at least that meeting, the Federal Reserve offering the slightest bit of a clue to what might be the next step. You'll recall that we've heard from Fed Chairman Jerome Powell, saying, we're not thinking about thinking about tapering any sort of those asset purchases, again, that $120 billion a month pace of asset purchases that it's been doing since the teeth of the pandemic.

But I want to read you this excerpt from the minutes, which just released. Quote, "A number of participants suggest that if the economy continued to make rapid progress toward the committee's goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases." And of course, we love to pore over these little semantic differences, but the minutes mentioning any sort of rapid progress to maybe launch the next round of discussions to maybe begin tapering.

That's the closest that we've heard the Federal Reserve so far in terms of trying to pare back some of the massive aggressive accommodation that it's put in place since the middle of the pandemic. So that is new from the minutes on the inflation front. It seems like a number of participants on the FOMC said that some of the supply chain bottlenecks, which we've heard could be transitory, could end up lasting longer than the end of 2021.

So that shows that there is some concern among the Federal Reserve officials that inflation might actually have higher than 2% readings even through the end of this year into the beginning of next year. That is also new. But broadly, as far as the stance on policy itself, no surprise the Federal Reserve is continuing to remain patient with near-zero rates and the asset purchase program, at least barring any sort of that rapid progress, as I just laid out, guys.

KRISTIN MYERS: Yeah, absolutely. Of course, everyone very interested to see when and how the Fed will make that pivot. Brian Cheung, thanks so much for breaking all of that down for us.