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The monetary policy committee participants in the US were of the view that further tightening of monetary policy would be appropriate if incoming information indicated that progress toward the US Federal Reserve's inflation objective was "insufficient", the minutes of the latest review meeting revealed.
The minutes revealed on Tuesday local time noted that the participants expected that the data arriving in the coming months would help clarify the extent to which the disinflation process was continuing, aggregate demand, and labour market fundamentals. After sharply tightening monetary policy over the past year and a half to reduce inflation, the Federal Open Market Committee (FOMC) in its latest meeting voted to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 per cent, keeping the policy rate unchanged for the second straight time on a trot. US Federal Reserve's commitment has been to bring down consumer inflation to its target of 2 per cent. Consumer price inflation remained elevated but continued to show signs of slowing. Consumer prices rose 3.2 per cent in the year through October, decelerating from the previous month and showing encouraging decelerating signs. "All participants judged that it would be appropriate for policy to remain at a restrictive stance for some time until inflation is clearly moving down sustainably toward the Committee's objective," the minutes read. Further, delving into the economic outlook in the US, the minutes noted that fourth-quarter GDP growth is likely to slow markedly from its third-quarter rate. However, average GDP growth over the second half of the year was projected to be a little faster than the first half's pace. "The staff also expected output in the fourth quarter to be temporarily restrained by the autoworkers' strike before being boosted in the first quarter as lost production begins to be made up," it added. Participants continued to view a period of below-potential growth in real GDP and some further softening in labour market conditions as likely to be needed to reduce inflation pressures sufficiently to return inflation to 2 per cent over time. (ANI)
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