Fed: Sizeable Risk From Capitol Hill Gridlock

The Federal Reserve has unsealed the minutes of its Open Market Committee meeting in April. Fed officials warn that a failure to agree on a federal budget plan could mean businesses will delay hiring plans.

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DAVID GREENE, HOST:

As for the broader economic outlook, we have news from the Federal Reserve. Yesterday, the Fed unsealed the minutes from its latest Open Market Committee meeting.

NPR's Chris Arnold tells us what it said.

CHRIS ARNOLD, BYLINE: In these meetings, Federal Reserve officials talk about their predictions for where the economy is headed next. And so analysts scour the minutes as soon as they're released. This time around, Fed officials appear to have plenty of concerns, but they still think that the economy is recovering.

PAUL EDELSTEIN: The economy is growing at a moderate pace.

ARNOLD: That's Paul Edelstein, an economist with IHS Global Insight.

EDELSTEIN: This moderate pace will continue and probably pick up down the road. Jobs will be created and the unemployment rate will come down.

ARNOLD: With Europe in rough shape, Fed officials did say that that posed a, quote, significant downside risk to economic activity.

They're also uneasy about what's called the fiscal cliff. That's the deadline coming up at the end of this year for Congress to deal with expiring tax cuts and make some major budget decisions.

EDELSTEIN: The Bush tax cuts, the temporary payroll tax cuts, extended unemployment benefits, and to solve the debt ceiling crisis last summer, about 1.2 trillion in spending cuts are also supposed to take effect.

ARNOLD: The political battle over all that could definitely have an impact on the economy.

Chris Arnold, NPR News.

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