Federal Reserve policy makers are on guard for signs that investors and the public are losing confidence in their ability to keep prices stable in a moderate recovery with little wage growth.
“Many participants observed the committee should remain attentive to evidence of a possible downward shift in longer-term inflation expectations,” according to a record of the Oct. 28-29 Federal Open Market Committee meeting released today in Washington. “Some of them noted that if such an outcome occurred, it would be even more worrisome if growth faltered.”
Policy makers are watching the outlook for inflation as they weigh the timing of the first interest-rate increase since 2006, which most officials expect to happen next year. The Fed last month ended a bond-purchase program intended to boost growth, citing improvements in the labor market.