Fed pushed to say more about pace of coming rate hikes
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WASHINGTON (MarketWatch) - A number of Federal Reserve officials pushed their colleagues to say more publicly about the pace of coming rate hikes, according to minutes from the October meeting released Wednesday, suggesting that the central bank still believes it is on track to hike rates next year despite low inflation and a weak global economic outlook.
By a 9-1 vote, the Fed on Oct. 29 voted to end its asset purchase program and repeated that rates are likely to stay near zero for 'a considerable time,' adding language that the first move could come sooner if the economy surprises to the upside. The Fed has said repeatedly this year that it expects rates to remain below what the Fed views as normal given the aftermath of the crisis.
According to the minutes of the Oct. 28-29 meeting, a 'couple' of Fed officials think it is time to change this language.
They see risks of keeping rates below their longer-run values for an extended period of time.
'Most' on the Fed supported keeping the language, but a 'number...thought it could soon be helpful to clarify the FOMC's likely approach.'
There was a sharp debate over keeping considerable time, with a 'couple' opposed to removing it because it would be seen as signaling a significant stance of policy, resulting in unintended tightening of market conditions.
And Fed officials agreed to take another crack at developing a consensus forecast. At the moment, each top Fed official presents his own forecast for the economy and the likely path of interest rates.
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