Extracts From the Minutes of the Federal Open Market Committee:
In their discussion of the economic situation and the outlook, meeting participants agreed that the information received over the intermeeting period indicated that labor market conditions improved further even as growth in economic activity appeared to have slowed. Growth in household spending had moderated, although households' real income had risen at a solid rate and consumer sentiment remained high. Since the beginning of the year, the housing sector had improved further, but business fixed investment and net exports had been soft. A range of indicators, including strong job gains, pointed to additional strengthening of the labor market. Inflation had continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and falling prices of non-energy imports. Market-based measures of inflation compensation remained low; survey-based measures of longer-run inflation expectations were little changed, on balance, in recent months. Domestic and global financial conditions eased over the intermeeting period, the incoming news on the foreign economic outlook was generally positive, and investor sentiment improved.
Participants generally agreed that the risks to the economic outlook posed by global economic and financial developments had receded over the intermeeting period. The public appeared to have interpreted Federal Reserve communications following the March FOMC meeting as indicating that achieving the Committee's economic objectives would likely require a somewhat more gradual pace of increases in the federal funds rate than anticipated earlier. The shift in policy expectations, along with incoming data showing that economic growth abroad picked up during the first quarter of the year, seemed to contribute to the improved tone in global financial markets. Several FOMC participants judged that the risks to the economic outlook were now roughly balanced. However, many others indicated that they continued to see downside risks to the outlook either because of concerns that the recent slowdown in domestic spending might persist or because of remaining concerns about the global economic and financial outlook. Some participants noted that global financial markets could be sensitive to the upcoming British referendum on membership in the European Union or to unanticipated developments associated with China's management of its exchange rate.