Fed Meeting Minutes: Uncertainty Has Increased Relative to the Average Level of the Past 20 Years

On May 29th, the minutes of the Federal Reserve meeting stated that the staff continued to note significant uncertainties surrounding trade policies and other economic policies. Currently, the projected uncertainty was regarded as higher than the average level over the past 20 years. Risks to actual economic activities were seen as leaning towards the downside. The staff considered the likelihood of an economic downturn to be nearly as large as the baseline forecast. The significant upward revision to the 2025 inflation forecast was regarded as a means to balance risks around that year's inflation forecast. Subsequently, Federal Reserve staff continued to view risks around the inflation forecast as tilted towards the upside. Recent increases in some inflation expectation measures raised the possibility that inflation could be more persistent than assumed in the baseline forecast. (FX168)