FOMC Excerpt: Many See Need For Temporary Restrictive Policy >

WASHINGTON (MNI) - The following is an excerpt from the Federal Open 

Market Committee minutes of the September 25 - 26 meeting, published 

Wednesday:

     Participants offered their views about how much additional policy 

firming would likely be required for the Committee to sustainably 

achieve its objectives of maximum employment and 2 percent inflation. A 

few participants expected that policy would need to become modestly 

restrictive for a time and a number judged that it would be necessary to 

temporarily raise the federal funds rate above their assessments of its 

longer-run level in order to reduce the risk of a sustained overshooting 

of the Committees 2 percent inflation objective or the risk posed by 

significant financial imbalances. A couple of participants indicated 

that they would not favor adopting a restrictive policy stance in the 

absence of clear signs of an overheating economy and rising inflation. 

     Participants reaffirmed that adjustments to the path for the policy 

rate would depend on their assessments of the evolution of the economic 

outlook and risks to the outlook relative to the Committees statutory 

objectives. Many of them noted that future adjustments to the target 

range for the federal funds rate will depend on the evaluation of 

incoming information and its implications for the economic outlook. In 

this context, estimates of the level of the neutral federal funds rate 

would be only one among many factors that the Committee would consider 

in making its policy decisions. 

     ** MNI Washington Bureau: (202)371-2121 ** 

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