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The word “strong” was referenced 32 times in the FOMC’s August 2018 minutes



GROWTH ASSESSMENT - “strong” is the word:

The outlook for the economy is positive and widely supported by data and anecdotal evidence, thanks to expansionary fiscal policies, broadly easy financial conditions and strong household and business confidence. An upsurge in exports, possibly in anticipation of forthcoming trade actions, may have exceptionally boosted growth in Q2.

Upside risks:

  • stronger boost from fiscal policy than previously expected (albeit it may be shorter-lived)

Downside risks:

  • a “large-scale and prolonged dispute over trade policies” is impacting activity, the labour market, investments and confidence (but no evidence yet that businesses with trade concerns have started scaling back projects);
  • recent weakness of the housing sector;
  • inversion of the yield curve: debate ongoing among members, some of whom are more concerned, while others suggesting “the signal from the yield curve needed to be considered in the context of other economic and financial indicators”.


INFLATION – “modest” inflationary pressures:

The improvement in labour market conditions show that pressures are increasing only gradually.

Upside risks:

  • “several” participants noted that trade tariffs represent “one source of upward pressure.”

Downside risks:

  • the persistence of restrictive factors (e.g. low productivity, lags, flows into and within the labour force) continue to drag down confidence in a sustainable return to 2% inflation. Most participants felt this would happen only over the medium term, while a few participants still remain sceptical.



  • aprogressive withdrawal of monetary policy accommodation is still suitable, a further hike would “likely soon be appropriate”;
  • it may be “fairly soon” coming a change in the assessment of the policy stance, from “accommodative” to more neutral as the Fed progresses towards further rates hikes;
  • we continue to anticipate two more hikes this year, then two additional hikes in H1 2019, followed by a pause as the economy gently decelerates.


MONETARY POLICY TOOLKIT in the event of a future downturn:

The theme will keep resurfacing regularly as participants agreed to discuss their policy options further and to broaden the discussion to include the evaluation of potential alternative policy strategies.

USARDI Annalisa , Senior Economist
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The word “strong” was referenced 32 times in the FOMC’s August 2018 minutes
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