FED MINUTES: SEVERAL PARTICIPANTS SUGGEST HALTING OR SLOWING BALANCE SHEET REDUCTION PENDING DEBT CEILING RESOLUTION

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Fed Minutes (January 2025)

  • Fed can maintain policy at restrictive level if economy strong
  • Several participants suggest halting or slowing balance sheet reduction pending debt ceiling resolution
  • Two participants believe risks to achieving inflation mandate outweigh risks to employment mandate
  • Most participants judged risks to dual mandate objectives were roughly in balance
  • Fed wants further progress on inflation before adjusting rates
  • Few believe Fed funds may not be far above neutral level
  • Various Fed officials see potential for big swings in reserves.
  • Fed may need to pause, slow run-off until debt limit resolved. Inflation risks skewed upward.

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