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U.S. NEWSThursday 18 February 2016

Minutes show Federal Reserve worried by global turmoil

M. CRUTSINGER Minutes of their discus- nomic data. The Fed raised judge at this point wheth- The economy created
AP Economics Writer sions released Wednesday rates from record lows in er the outlook for inflation 151,000 jobs in January,
WASHINGTON (AP) — Fed- showed Fed officials ac- December, the first hike in and economic growth had pushing the unemploy-
eral Reserve policymakers knowledging that the de- nearly a decade. changed materially, but ment rate down to an
expressed growing con- velopments made it diffi- While Fed officials contin- they thought that uncer- eight-year low of 4.9 per-
cerns at their meeting last cult to forecast growth and ued to express confidence tainty surrounding the out- cent. The Fed reported
month about potential inflation. in the strengthening labor look had increased as a re- Wednesday that industrial
threats to the U.S. econo- The officials said their out- market, they were less bull- sult of recent financial and production rose 0.5 per-
economic developments,” cent in January, the best
Federal Reserve Board Chair Janet Yellen testifies on Capitol Hill in Washington. Fed policymak- the minutes said. showing since July, though
ers expressed growing concerns at their meeting last month about potential threats to the U.S. Its brief policy statement retail sales last month re-
economy, including turbulence in financial markets, plunging oil prices and slowing growth in removed language it had mained modest.
China and other emerging markets. been using that officials In December, the Fed had
judged the risks facing the lifted its target for over-
(AP Photo/Susan Walsh) economy as “balanced.” night bank lending from a
Most Fed officials felt there record low to a new range
my, including turbulence look had grown more un- ish on other parts of the was not yet enough evi- of 0.25 percent to 0.5 per-
in financial markets, plung- certain, and they stressed economy such as manu- dence to say the balance cent — the first hike after
ing oil prices and slowing that the pace of any inter- facturing. of risks had “changed ma- seven years of near-zero
growth in China and other est-rate increases would “Most participants indicat- terially,” though some offi- rates. It also released pro-
emerging markets. hinge on the latest eco- ed that it was difficult to cials did believe the down- jections that indicated four
side risks had increased, additional quarter-point
according to the minutes. moves in 2016.
Among the threats to U.S. But since the start of this
growth, the minutes cited year, global financial mar-
the slowdown in China and kets have been rocked
falling commodity prices by disclosures that China,
that could hurt growth the world’s second largest
prospects in emerging economy, may be slow-
market nations that pro- ing more than previously
duce those commodities. believed. Oil prices have
The Fed officials also dis- tumbled, while the U.S. dol-
cussed the steep declines lar has strengthened. Both
in stock prices that had oc- of those developments
curred since the beginning could make it harder for
of the year. the Fed to achieve its infla-
Since the Fed’s January tion target. Many private
meeting, some economic economists have cut their
indicators have flashed forecasts for Fed rate hikes
more encouraging signals. this year from four down to
two or fewer.
US producer prices up 0.1 percent in January Fed Chair Janet Yellen ac-
knowledged the darker
AP Economics Writer sures inflation pressures be- in core prices at the whole- annual price increases of 2 economic landscape in
WASHINGTON (AP) — U.S. fore they reach the con- sale level could attract percent. The Fed believes Congressional testimony
producer prices edged up sumer, is down 0.2 percent. attention at the Federal that is the optimal level for last week. But she said it was
slightly in January as the Core inflation, which ex- Reserve, where a number inflation and readings be- too soon to know whether
biggest rise in food costs in cludes energy and food, of officials have said they low that target raise con- the new risks would be se-
eight months offset a fur- rose 0.4 percent in Janu- will be watching for signs cerns about the potential vere enough to alter inter-
ther decline in energy pric- ary, the biggest one-month of higher inflation in de- threat of deflation. est rate policies.
es. The tiny overall increase jump in 15 months. Over termining when to raise Inflation pressures at the Yellen said the Fed was not
indicated that inflation the past 12 months, core in- a key interest rate again. consumer level have also on a “pre-set” course for
pressures remain modest. flation is up 0.6 percent. The Fed raised the rate in been low. For all of 2015, rate hikes and would as-
The Labor Department said A big drop in energy prices December for the first time consumer prices were up sess at its next meeting on
Wednesday that its Pro- in the past two years and in seven years but held off just 0.7 percent, the small- March 15-16 whether re-
ducer Price Index rose 0.1 a strong dollar have com- boosting rates in January. est annual increase in sev- cent developments have
percent in January after bined to keep inflation low. The Fed has said further en years. For January, en- slowed the U.S. economy
having fallen 0.2 percent in Jennifer Lee, senior econo- increases will depend on ergy prices fell 5 percent, or threatened to derail the
December. Over the past mist at BMO Capital Mar- seeing movement toward reflecting big drops in all Fed’s goal of pushing in-
year, the PPI, which mea- kets, said that the increase achieving the Fed’s goal of types of energy.q flation back toward 2 per-
cent. q