The Fed's baseline view is that core inflation rises back to the central bank's 2% target following three interest-rate cuts in 2019, which Clarida said were put in place partly to offset surprisingly strong global disinflationary headwinds.
While Mr. Clarida provided no hints about the future direction of interest rates, he said "the downside risk of the global outlook is maybe diminished a bit" and softening global growth may be bottoming out.
Monetary policy is in a "good place" - after three rate cuts past year - and will continue to support growth, Fed Vice Chairman Richard Clarida said in a speech. Fed officials unanimously agreed to leave rates unchanged at last month's policy meeting and signaled that rates are likely to stay pat for the time being without a substantial change in their economic outlook.
Directors of the Fed banks described USA economic conditions as "positive and were optimistic about the prospects for economic growth", the minutes said.
The Fed should consider "doubling down" on its inflation target, he said.
The Fed kept the discount rate unchanged at 2.25% at its December 10-11 meeting in keeping with its unanimous decision to also leave its benchmark overnight lending rate in a target range of between 1.50% and 1.75%. They also signaled policy would be on hold through 2020, keeping the central bank on the sidelines during a US presidential election year.
She told the panel that in the news conference that would follow the announcement she intended to tell reporters, if asked, that "patient" meant that the central bank would not start raising rates until after the next two meetings. The Committee will proceed on a meeting-by-meeting basis and will be monitoring the effects of our recent policy actions along with other information bearing on the outlook as we assess the appropriate path of the target range for the federal funds rate. "There are some indications that headwinds to global growth may be beginning to abate", Clarida said.
St. Louis Fed President James Bullard, speaking later on Thursday in Madison, Wisconsin, played down the risks to the US economy from geopolitical tensions.
While 2015 unfolded with continued low inflation, the Fed did not end interest rate increases until December of that year, with the Fed waiting a whole year before raising interest rates by a small quarter point in December 2016.
The release of the minutes last week coincided with news of a US air strike that killed a top Iranian general. That led President Donald Trump, who tapped Powell to succeed Yellen, to complain that the central bank had raised rates too much and hurt the economy and the stock market.
Clarida is leading the Fed's review of monetary policy strategy, tools and communications policy. The actual transcript of what is said at the meetings is not released until five years have passed.