The minutes reiterated that theme, saying that central bankers wanted to clarify that holding interest rates low “did not reflect an expectation that the economy would remain weak, but rather reflected the committee’s intention to support a stronger economic recovery.”
Many participants said that “specifying numerical thresholds” for unemployment and inflation would be a better way to give forward guidance about how long they will keep the main interest rate near zero, according to the minutes. Some officials said giving thresholds may be “too simple to fully capture the complexities of the economy and the policy process or could be incorrectly interpreted as triggers prompting an automatic policy response,” the minutes show.
Most agreed that numerical thresholds could give “more clarity about the conditionality” of guidance, and more work is needed to address the “communications challenges,” according to the minutes.
The minutes noted that policy makers had conducted an experiment on building a “consensus forecast” and participants agreed to discuss the results at their next meeting on Oct. 23- 24.
All of the Fed’s 12 regional presidents and seven Washington-based governors are participants in meetings of the FOMC. The minutes do not identify participants by name.
The FOMC members are the 12 participants who vote on policy. The governors, the New York Fed President and a rotating group of four of the regional presidents serve as voting members of the committee. This year, the Cleveland, Richmond, Atlanta and San Francisco Fed Presidents hold a vote.
The FOMC members voted 11-1 in favor of their action at the September meeting with only Richmond Fed President Jeffrey Lacker dissenting. Lacker has dissented from every FOMC statement this year.
The S&P 500 has climbed more than 15 percent this year and remains near a four-year closing high of 1,465.77 reached the day after the Fed announced the new bond buying Sept. 13.
The index has more than doubled since reaching a 12-year low of 676.53 on March 9, 2009. Next year the index will probably exceed its record of 1,565.15 reached in October 2007, according to strategists’ estimates compiled by Bloomberg News.
Central bank stimulus helped boost gold prices 11 percent last quarter, the most since June 2010, on speculation the efforts will spur demand for the metal as a hedge against inflation.
Bullion futures for December delivery rose 0.2 percent to settle at $1,779.80 an ounce in New York trading yesterday. Treasury 10-year yields fell 1 basis point to 1.62 percent yesterday from 1.88 at the end of last year. The yield tumbled to a record low of 1.38 percent on July 25.
While reducing borrowing costs, the Fed hasn’t made steady progress toward meeting its mandate to achieve full employment. According to the median estimate in a Bloomberg Survey of economists, the Labor Department will report tomorrow that the economy added 115,000 jobs in September. The unemployment rate probably rose to 8.2 percent from 8.1 percent, according to their forecasts.