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Fed's Longer-Run Goals and Monetary policy Strategy In the Near Future: Minutes

FED
  • Participants agreed that "refinements" to the annual statement on Longer-Run Goals and Monetary policy Strategy "could be helpful." Officials thought that it would be "important to finalize all changes" in "the near future."
  • Majority of participants thought yield curve control would provide only "modest benefits in the current environment." Costs to this policy would include rapid increase in the Fed's balance sheet.
  • Some worried about financial stability risks if pandemic persisted, minutes say.
  • Many participants commented that the pace of employment gains, which was quite strong in May and June, had likely slowed. Participants generally agreed that prospects for further substantial improvement in the labor market would depend on a broad and sustained reopening of businesses.
  • Fed staff continued to observe that the uncertainty related to the economic effects of the pandemic was extremely elevated and that the unusual nature of the pandemic-related shock made assessments about how the economy might evolve in the future more challenging than usual, the minutes said. "The staff still judged that a more pessimistic projection was no less plausible than the baseline forecast."
  • On inflation: In their comments about inflation, participants generally judged that the negative effect of the pandemic on aggregate demand was more than offsetting upward pressures on some prices stemming from supply constraints or from higher demand for certain products, so that the overall effect of the pandemic on prices was seen as disinflationary.
  • Participants reaffirmed their commitment to using the Federal Reserve's full range of tools to support the U.S.economy during this challenging time, thereby promoting its maximum employment and price stability goals.
MNI Washington Bureau | +1 202-371-2121 | evan.ryser@marketnews.com
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MNI Washington Bureau | +1 202-371-2121 | evan.ryser@marketnews.com
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