WASHINGTON — Policymakers at the Federal Reserve were nearly united last month in their belief that the economic recovery needed additional help and that the central bank had the ability to provide it, according to the official account of the meeting released Thursday.
“All members but one agreed that the outlook for economic activity and inflation called for additional monetary accommodation,” read the minutes of the September meeting, and participants were particularly concerned about the high unemployment rate.
The minutes, which summarize the discussions at the Fed’s top policymaking meeting, are routinely released three weeks after the meeting’s end.
At the last meeting, held Sept. 12-13, the Fed announced a major round of asset purchases aimed at stimulating the economy and pulling down the stubbornly high unemployment rate, which has ranged from 8.1 to 8.3 percent this year.
In their discussions leading up to the decision, many at the meeting noted the uncertainty surrounding the economy, given the risks posed by the continuing debt crisis in Western Europe and the major tax increases and spending cuts due to hit next year in the United States. And “a number of participants” expressed uncertainty about the impact the new Fed program might have and how it might complicate monetary policy in the future.
Thus, the Fed minutes said the committee adopted a “flexible approach” that would allow the Fed “to tailor its policy response over time.”
Many Federal Reserve officials indicated that they would also support providing more explicit guidance on interest rate policies. The Fed intends to keep short-term interest rates near zero at least until mid-2015.
But the minutes said that “many” officials suggested tying the guidance to economic benchmarks, like the unemployment rate, rather than to the calendar.
“A change in the calendar date might be interpreted pessimistically as a downgrade of the committee’s economic outlook rather than as conveying the committee’s determination to support the economic recovery,” some participants noted, according to the minutes.
Moreover, using economic data rather than a specific date might allow financial markets to adjust their expectations of Federal Reserve policy more fluidly.
Still, Fed officials indicated that choosing an economic benchmark might be difficult, implying that the policy change would not be an imminent one.