Fed Minutes: "Easing May Be Needed If Recovery Falters"

Tyler Durden's picture

Key highlights:

  • SEVERAL ON FOMC SAID EASING MAY BE NEEDED IF RECOVERY FALTERS
  • MOST' FOMC PARTICIPANTS SAW GRADUAL DECLINE IN JOBLESS RATE
  • MOST FOMC PARTICIPANTS SAW INFLATION SUBSEQUENTLY AT-BELOW 2%
  • MOST FOMC MEMBERS SAW UNEMPLOYMENT ABOVE TARGET IN LATE 2014
  • SOME PARTICIPANTS SAW RISKS INFLATION PRESSURES COULD BUILD

Actually, nothing new in the minutes which are largely a rehash of the official statement already released. The key paragraphs:

The Committee also stated that it will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability. Several members indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough.

 

Committee members discussed the desirability of providing more clarity about the economic conditions that would likely warrant maintaining the current target range for the federal funds rate and those that would indicate that a change in monetary policy was appropriate. Doing so might help the public better understand the conditionality in the Committee’s forward guidance. The Committee also discussed the relationship between the Committee’s statement, which expresses the collective view of the Committee, and the policy projections of individual participants, which are included in the SEP. The Chairman asked the subcommittee on communications to consider possible enhancements and refinements to the SEP that might help better clarify the link between economic developments and the Committee’s view of the appropriate stance of monetary policy.

 

The need to compensate for a substantial period during which the policy rate was constrained by the zero bound was also cited by a few members as a possible reason to maintain a very low level of the federal funds rate for a longer period than would  otherwise be the case.

The minutes - link.