Fed officials concerned unclear Trump agenda could hurt economy

Federal Reserve officials privately expressed concerns in a July meeting that a lack of clarity about the Trump administration and Congress’s economic agenda could be hurting the economy, according to minutes released Wednesday.

Several members of the central bank’s Federal Open Markets Committee (FOMC), which sets Fed monetary policy, said during the July 25-26 meeting that “uncertainty about the course of federal government policy, including in the areas of fiscal policy, trade, and health care” were holding back businesses from hiring and spending.

The concern comes as President Trump and GOP lawmakers attempt to advance their ambitious legislative agenda after early setbacks and the expanding investigation into Trump’s ties to Russia’s attempt to interfere in the presidential election.

{mosads}Trump and Republicans are trying to rally support behind a sweeping tax reform effort after failing to repeal and replace the Affordable Care Act. While the White House and GOP congressional leaders have agreed to broad tax reform principles, they haven’t yet united around a specific bill or set of proposals.

Trump is also seeking support for a massive infrastructure spending plan, but Republican lawmakers aren’t eager to spend billions in taxpayer money.

Fed officials also fretted over inflation levels that have consistently landed below the bank’s 2 percent target range. The Fed’s main gauge of inflation, the personal consumption expenditures price index, rose only 1.4 percent in May from the previous year. A 2.1 percent annual increase in February was the only month since 2012 that the index’s annual increase exceeded the Fed’s target.

Federal Reserve Board Chairwoman Janet Yellen has attributed low inflation to sharp, one-time declines in prescription drugs and cellphone plans, saying inflation is likely to inch toward the Fed’s target rate soon.

But Yellen’s colleagues said they were worried about advancing with planned interest rate hikes — which could lower inflation — until prices rose slightly on their own.

Some members “observed that the Committee could afford to be patient under current circumstances,” the minutes said, “and argued against additional adjustments until incoming information confirmed that the recent low readings on inflation were not likely to persist.”