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| The Federal Reserve (Photo credit: CityGypsy11) |
Minutes of the Fed’s September 12-13 meeting released on Thursday showed officials were broadly in agreement that more policy stimulus was needed given the meager economic recovery. “Members generally judged that without additional policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions,” the minutes said.
The central bank’s latest bond purchases come on top of the $ 2.3 trillion in debt it has already bought in an attempt to spur stronger growth. It has also held overnight interest rates near zero since late 2008, and said after its September meeting they would likely remain there until at least mid-2015. There was clear support for an approach championed by Chicago Federal Reserve Bank President Charles Evans that would lay out the economic factors the central bank would consider in deciding when to finally raise interest rates.
Evans has advocated keeping rates ultra low for as long as it takes to get the jobless rate below 7 percent as long as inflation does not top 3 percent. But arriving at a consensus on what exact markers to use – and how to communicate the shift away from the Fed’s current 2015 guidance – remained a tricky task. “Most participants agreed that the use of numerical thresholds could be useful in providing more clarity about the conditionality of the forward guidance but thought that further work would be needed to address the related communications challenges,” the minutes said.
With the nation’s unemployment rate at 8.1 percent and expected to have ticked even higher in September, the Fed made clear it will continue its policy easing until the jobs outlook improves substantially. It vowed to maintain stimulus as long as inflation is under control even after the recovery picks up. ... Continue to read.
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