FOMC Minutes

February 19, 2014

The most interesting paragraph to be found in minutes from the Federal Open Market Committee meeting of January 28-29 revealed that a few committee members desire a federal funds rate hike by around mid-2014, but few in the Fed lexicon suggests two or three people from a total of ten voting officials plus eight non-voting regional Fed Presidents.

A few participants raised the possibility that it might be appropriate to increase the federal funds rate relatively soon. One participant cited evidence that the equilibrium real interest rate had moved higher, and a couple of them noted that some standard policy rules tended to suggest that the federal funds rate should be raised above its effective lower bound before the middle of this year. Other participants, however, suggested that prescriptions from standard policy rules were not appropriate in current circumstances, either because the target federal funds rate had been constrained by the lower bound for some time or because the equilibrium real rate of interest was likely still being held down by various factors, including the lingering effects of the financial crisis, and was significantly below the value of the longer-run rate built into standard policy rules.

The entire published minutes do not provide a whole lot of color commentary to the basic facts that emerged in the statement released immediately after the meeting adjourned.  This was the last one chaired by Ben Bernanke and was attended by his successor, Janet Yellen, in her former capacity as Vice Chairperson.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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