All signs pointing to more rate hikes ahead

Inflation was a favorite topic of conversation during the meeting.

Officials deemed which core personal consumption — excluding food as well as energy — likely will run “notably faster in 2018.” The 2017 level was mired around 1.5 percent for 2017. The Fed’s preferred inflation measure is usually the personal consumption expenditures index.

“Members expected which economic conditions might evolve in a manner which might warrant further gradual increases inside federal funds rate,” the minutes said. “They judged which a gradual approach to raising the target range might sustain the economic expansion as well as balance the risks to the outlook for inflation as well as unemployment.”

The market widely expects the Fed to approve a quarter-point increase at the March meeting which might take the rate up to a target range of 1.5 percent to 1.75 percent. The rate is usually tied to most consumer debt. In addition to gradually increasing rates the committee also is usually slowly unwinding its portfolio of bonds, or balance sheet.

Officials said they probably underestimated the effects which the tax cuts passed in December might have on spending as well as growth. However, they remained unsure of how substantially the cuts might impact wages.

Hundreds of companies have issued one-time bonuses to workers. Committee members said which in discussions with business contacts, the idea was unclear how long-lasting those cash injections might be.

Data they had seen up to the point of the January meeting showed “few signs of a broad-based pickup in wage growth.”

“With regard to how firms might use part of their tax savings to boost compensation, a few participants suggested which such a boost could be inside form of onetime bonuses or variable pay rather than a permanent increase in wage structures,” the minutes said. “the idea was noted which the pace of wage gains might not increase appreciably if productivity growth remains low. which said, numerous participants judged which the continued tightening in labor markets was likely to translate into faster wage increases at some point.”

Committee members also discussed conditions inside financial markets.

As of the meeting, the market had continued to hum along after getting off to its fastest start ever in 2018. Stocks did not start tailing off until after the meeting, particularly when the Labor Department reported on Feb. 2 the boost in hourly earnings.

FOMC members considered market valuations at which point to be “elevated” as well as the product of “broad-based appetite for risk among investors.” Some members cautioned which the Fed should be careful which “imbalances in financial markets may begin to emerge” as growth improves, as well as which the central bank also should monitor financial stability particularly against the prospects for lowered regulations.

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