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Fed releases 2016 policy meeting record

Records released by the Federal Reserve on Friday revealed the scope of officials’ discussions in 2016 on how quickly interest rates could be raised after raising interest rates from near zero at the end of last year.

Much of the discussion was directed towards geopolitical progress. First after China’s slowdown and lower commodity prices could cool US manufacturing, and then British voters voted in favor of leaving the European Union.

The Federal Reserve will raise the benchmark rate only once in 2016 in December, a few weeks after Donald Trump won the presidential election.

Hundreds of pages of records from eight policy meetings in 2016, published by the central bank after a traditional five-year delay, provide the most complete view of decision-making at the dawn of the transition to a “normalization” policy. To do.

The results of the meeting policy were published shortly after the meeting was over, and the minutes of the meeting were published three weeks later, but no verbatim records of the discussion had been published so far.

The writing record renews the mindset of several key players in the field of policy making, including Fed Chair Jerome Powell, who was in his fifth year as governor at the time, and Fed Chair Janet Yellen, who is now Treasury Secretary. Provided insights. ..

They are working in December on how Mr. Trump’s election, which campaigned with promises to reform government spending, taxes and trade policies, will change the outlook for growth and inflation over the next few years. Shows officials.

“If the next administration radically changes economic policy in some areas, as promised during the campaign, we … must develop an approach for making monetary policy in much larger situations.” Said Stanley Fischer, then Vice-Chairman of the Fed. ..

They also reveal a sense of humor for officials in their hours of policy deliberation. James Bullard, President of the Federal Reserve Bank of St. Louis, jokingly began discussions about the economy on December 13, 2016. “According to some interpretations of the apocalypse, when three anomalous events happen together, they may be a sign that the apocalypse is near. Let’s take stock,” he began. “The Chicago Cubs won the World Series, Donald Trump won the presidency, and Bob Dylan won the Nobel Prize.”

Meeting records show officials meditating on how the elections revealed a broader frustration with Americans who felt left behind in the economy.

Mr. Trump criticized the Fed during a campaign in which Republican candidates attacked Mr. Yellen in September of that year, claiming that the central bank is holding down interest rates to support Democrats in ballot boxes. did.

Yellen’s deputy commander, Fisher, warned under Trump that “there are likely to be challenges with the current Fed procedures and their independence.”

“No matter what happens, it is important for us to act with the goal of achieving our dual mission and with the calm we have shown in the past,” Fisher said. “The conclusion is very simple. We have to do our job.”

Write in Nick Timiraos (nick.timiraos@wsj.com)

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Fed releases 2016 policy meeting record

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