FOMC Minutes 06/28/07
FOMC Minutes Jun 28
The pace of real consumer spending appeared to have slowed somewhat in the second quarter. The household wealth-to-income ratio ticked down in the first quarter.
Elevated inventories of unsold new homes continued to weigh on residential construction activity. Headline consumer price inflation stepped up in recent months, driven by large increases in the index for energy.
Spreads on speculative-grade corporate bonds narrowed. Participants generally agreed that the housing sector was likely to remain a drag on growth for some time yet and represented the most significant downside risk to the economic outlook.
A number of participants pointed to rising mortgage delinquency rates and related difficulties in the subprime mortgage market as factors that could crimp the availability of mortgage credit and the demand for housing.
The availability of credit to some highly leveraged and other lower-rated borrowers appeared to be tightening a bit and investors seemed to reevaluate the risks associated with investments in complex and illiquid financial instruments.
Some decline in the pace of trend productivity growth could not be ruled out--a development that could have implications for business costs and price pressures.
The level of the unemployment rate consistent with stable inflation could be lower than previously thought--a possibility that would help to explain the absence of outsized wage pressures in the current environment.
Total consumer price inflation had moved substantially higher, boosted by rising energy and food prices.
The pace of real consumer spending appeared to have slowed somewhat in the second quarter. The household wealth-to-income ratio ticked down in the first quarter.
Elevated inventories of unsold new homes continued to weigh on residential construction activity. Headline consumer price inflation stepped up in recent months, driven by large increases in the index for energy.
Spreads on speculative-grade corporate bonds narrowed. Participants generally agreed that the housing sector was likely to remain a drag on growth for some time yet and represented the most significant downside risk to the economic outlook.
A number of participants pointed to rising mortgage delinquency rates and related difficulties in the subprime mortgage market as factors that could crimp the availability of mortgage credit and the demand for housing.
The availability of credit to some highly leveraged and other lower-rated borrowers appeared to be tightening a bit and investors seemed to reevaluate the risks associated with investments in complex and illiquid financial instruments.
Some decline in the pace of trend productivity growth could not be ruled out--a development that could have implications for business costs and price pressures.
The level of the unemployment rate consistent with stable inflation could be lower than previously thought--a possibility that would help to explain the absence of outsized wage pressures in the current environment.
Total consumer price inflation had moved substantially higher, boosted by rising energy and food prices.
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