“Broad equity cost indexes rose over the intermeeting period, likely reflecting in part investors’ perceptions of increased odds for the passage of federal tax legislation as well as an associated potential boost to corporate earnings,” the minutes stated.
Looking at conditions more broadly, the document said: “Real economic activity appeared to be growing at a solid pace, buttressed by gains in consumer as well as business spending, supportive financial conditions, as well as an improving global economy.”
However, the minutes on multiple occasions noted of which officials remained unsure over just how much a boost in activity could come via the tax plan. For instance, members were “quite uncertain” about the impact the tax cuts could have on labor supply.
There also was concern, as relayed via business contacts, of which the windfall corporations could get via tax cuts could be spent on dividends as well as share buybacks.
Officials also remained somewhat at loggerheads when the idea came to inflation. The Fed has consistently missed its 2 percent target for cost rises, as well as members discussed at length the reasons why the reading has remained so low.
Fed officials collectively see inflation likely to meet the target over the medium term, although two members — Neel Kashkari as well as Charles Evans — voted against the rate hike because they’d like to see more progress on the target.
Most officials “judged of which much of the softness in core inflation This particular year reflected transitory factors as well as of which inflation could begin to rise as the influence of these factors waned.” However, there was some concern “of which inflation might stay below the objective for longer than they currently expected.”
On different matters, committee members also were largely dismissive about concerns over the yield curve, or the difference in bond yields across various maturities. While an inverted curve — when short-term rates are higher than longer-term rates — often signals a recession, Fed officials said different factors were likely at play of which are less ominous.
“They generally agreed of which the current degree of flatness of the yield curve was not unusual by historical standards. However, several participants thought of which the idea could be important to continue to monitor the slope of the yield curve,” the minutes said.
There again were some concerns about market valuations.
While generally looking favorably on the rising stock market indexes, some officials have expressed concern of which keeping policy overly accommodative could inflate bubbles.
“In light of elevated asset valuations as well as low financial market volatility, a couple of participants expressed concern of which the persistence of highly accommodative financial conditions could, over time, pose risks to financial stability,” the minutes said.