Federal Reserve officials generally believe the threat posed by subdued inflation is greater than the danger of rapidly rising prices, as they begin to factor in the possible effect of President Joe Biden’s $1.9tn fiscal stimulus.
The US central bank held an extensive discussion of inflationary trends last month in light of a possible acceleration in the economic recovery this year triggered by Biden’s stimulus package, according to minutes from the January meeting of the Federal Open Market Committee.
“Participants generally viewed the risks to the outlook for inflation as having become more balanced than was the case over most of 2020, although most still viewed the risks as weighted to the downside,” the FOMC minutes said.
America’s top central bankers are not expecting a sustained jump in prices, a view conveyed by Jay Powell, the Fed chairman, in a speech last week.
While prices were expected to move higher, they were expected to do so “along a…