US central bank expects economy to grow thanks to tax overhaul

WASHINGTON, Feb 21 (KUNA) -- The US Federal Reserve policymakers expect the nation's economy to grow and labor markets to keep improving partly due to recently enacted tax cuts, according to meeting notes released Wednesday.
Fed officials at a Federal Open Market Committee monetary policy meeting last month partially credited the tax overhaul bill as a reason to be optimistic about the economy over the short term, citing recent consumer and business spending as a sign of "substantial underlying economic momentum." Early signs that the effects of the tax cuts "might be somewhat larger in the near term than previously thought," lead some at the central bank to boost forecasts for economic growth this year from estimates made in December, according to minutes of the January 30-31 meeting.
The Fed affirmed that a "gradual approach" toward raising interest rates would be appropriate, and is likely to raise rates at its next meeting, March 20-21, which will be the first led by its new chairman, Jerome Powell.
US President Donald Trump signed into law a USD 1.5 trillion tax overhaul in December, and Congress earlier this month approved a USD 300 billion increase in federal spending over the next two years.
Economists expect the measures could boost growth and drive down unemployment to levels to record lows, but also raise federal budget deficits even higher.
Fed officials "cautioned that imbalances in financial markets may begin to emerge as the economy continued to operate above potential." (end) hy.mb