Minutes of the April 28-29 joint meeting of the Federal Open Market Committee and the Federal Reserve Board of Governors were released yesterday.

Looking ahead, participants weighed factors that would likely restrain the pace of economic recovery over the medium term, according to the minutes.

Strains in credit markets were expected to recede only gradually as financial institutions continued to rebuild their capital  and remained cautious in their approach to asset-liability management, especially given that the outlook for credit performance was likely to improve slowly.

Some sectors, such as financial services and residential construction, might  account for a smaller share of the economy in coming years, and the resulting reallocation of labor across sectors could weigh on labor markets for some time.

Households would likely remain cautious, and their desired saving rates would be relatively high over the extended period that would be required to bring their stock of wealth back up to more normal levels relative to income. The stimulus from fiscal policy was expected to diminish over time as the budget moved to a sustainable path. Demand for U.S. exports would also take time to revive, reflecting the gradual recovery of major trading partners, according to the minutes.

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