September 20 · Published October 11, 2006
Statement·Presser·Minutes
BBBen S. BernankeSeptember 20, 2006 FOMC Minutes
Our reading
The minutes read somewhat more hawkish relative to the statement because they provide a more detailed and candid account of the FOMC's internal deliberations, revealing a stronger and more widespread concern about inflation risks. While the statement acknowledges that "some inflation risks remain," the minutes elaborate on the specific worries of participants, such as the potential for rising labor costs, elevated inflation expectations, and the risk that inflation might not moderate as anticipated. This detailed discussion, including the dissent from Mr. Lacker who favored immediate tightening, underscores a more pronounced hawkish tone than the relatively balanced and forward-looking language of the public statement.
Our reading compares the minutes of the September 20 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- Ben S. Bernanke
- Susan S. Bies
- Timothy F. Geithner
- Jack Guynn
- Donald L. Kohn
- Randall S. Kroszner
- Jeffrey M. Lacker ↑ dissented
- He believed that further tightening was needed to bring inflation down more rapidly than would be the case if the policy rate were kept unchanged. Recent data indicated that inflation remained above levels consistent with price stability. Moreover, the upswing in compensation and unit labor costs in the first half of the year indicated that inflation risks were tilted to the upside. Although real growth was likely to be moderate in coming quarters, in his view it was unlikely to be slow enough to bring core inflation down.
- Frederic S. Mishkin
- Sandra Pianalto
- Kevin Warsh
- Janet L. Yellen
From the minutes
FOMC minutes
Notation Vote
By notation vote completed on August 28, 2006, the Committee unanimously approved the minutes of the FOMC meeting held on August 8, 2006.
Vincent R. Reinhart
Secretary
What changed from the previous meeting’s minutes
- The FOMC voted to hold the federal funds rate at 5-1/4 percent in both meetings, with Mr. Lacker dissenting both times.
- The August statement added that inflation pressures seemed likely to moderate over time, a phrase absent from the June statement.
- The September minutes noted core inflation increased at a more subdued pace in July and August, versus continued elevation in June.
- The September minutes reported a jump in labor compensation in the first half of the year, not mentioned in the August minutes.
- The September minutes cited lower energy prices as supporting growth, while the August minutes emphasized higher energy costs restraining demand.
- The September minutes replaced Mr. Kroszner's vote with Mr. Mishkin's, reflecting a committee membership change.
Summary generated automatically from the two documents.