Fed's minutes: economic conditions to develop in way that allows for tightening

The Federal Reserve released the minutes of the May 2-3 meeting, at which the Federal Open Market Committee members voted to hold overnight interest rates steady at between 0.75% and 1 percent, after increasing them by 25 basis points in the mid-March meeting, matching expectations back then.

FOMC members pointed to the data available to the Committee since the March 14-15 meeting, as the labor market kept improving despite a slowdown in economic activity, while labor gains were solid in the medium term, as the unemployment rate fell. 

Members said household spending rose modestly, but consumption growth foundations remained strong, as fixed-rate investment stabilized, while inflation gauges in the last 12 month were near the bank's long-term 2% target, while still below that target when excluding energy and food prices.

Members asserted the Committee's commitment to boost job opportunities and stabilize prices, while pointing to the slow growth in the first quarter as probably transitory, as members still project gradual tightening of the monetary policy to allow the economy to expand moderately.  

Inflationary pressures are expected to steady at 2% in the medium term, while considering short-term risks as roughly balanced, as the Committee continues to monitor inflation gauges and global economic and financial developments closely. 

As of 07:07 GMT, the dollar index, measuring the greenback's performance against a basket of six major rivals, rose 0.02% to 97.37 from the opening of 97.35, with an intraday high at 97.47, and a low at 97.25.

Similarly, members said that taking into consideration the labor conditions and current inflation rates, the Committee decided to keep interest raters at the range of 0.75% to 1 percent, while keeping the monetary policy accommodative, offering further support to the labor sector and nudging inflation firmly towards 2%. 

The Committee said it's assessing the current and projected economic conditions, with an eye towards achieving its targets of full employment and 2% inflation, while taking into consideration a wide group of data and economic information, including the labor market conditions and inflation indices. 

Members expect the economic conditions to develop in a way that allows for gradual tightening of the policy, with a path that ends just below the projected interest rates levels in the long term, while reaffirming that the actual path of short-term overnight interest rates depends on aforementioned economic projections and data.  

Otherwise, the Committee is carrying on its current policy of reinvesting its holdings of debt, mortgage-backed securities, and treasury bills and selling them in public auctions to trim them down from their current high levels in the long term, and in order to keep the financial conditions accommodative, while noting that the current balance sheet stands at $4.5 trillion.