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WASHINGTON (MNI) - The following is an excerpt from the Federal Open
Market Committee minutes of the September 25 - 26 meeting, published
Almost all considered that it was also appropriate to revise the
Committees postmeeting statement in order to remove the language
stating that the stance of monetary policy remains accommodative.
Participants discussed a number of reasons for removing the language at
this time, noting that the Committee would not be signaling a change in
the expected path for policy, particularly as the target range for the
federal funds rate announced after the Committees meeting would still
be below all of the estimates of its longer-run level submitted in the
September SEP. In addition, waiting until the target range for the
federal funds rate had been increased further to remove the
characterization of the policy stance as accommodative could convey a
false sense of precision in light of the considerable uncertainty
surrounding all estimates of the neutral federal funds rate.
With regard to the postmeeting statement, members agreed to remove
the sentence indicating that the stance of monetary policy remains
accommodative. Members made various points regarding the removal of the
sentence from the statement. These points included that the
characterization of the stance of policy as accommodative had provided
useful forward guidance in the early stages of the policy normalization
process, that this characterization was no longer providing meaningful
information in light of uncertainty surrounding the level of the neutral
policy rate, that it was appropriate to remove the characterization of
the stance from the Committees statement before the target range for
the federal funds rate moved closer to the range of estimates of the
neutral policy rate, and that the Committees earlier communications had
helped prepare the public for this change.
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