April 27–28 · Published May 19, 2010
Statement·Presser·Minutes
BBBen S. BernankeApril 27–28, 2010 FOMC Minutes
Our reading
The minutes are consistent with the statement because both documents convey the same key economic assessments and policy decisions: economic activity is strengthening, the labor market is improving, inflation remains subdued due to resource slack, and the FOMC maintains the federal funds rate at 0 to 1/4 percent with an expectation of exceptionally low rates for an extended period, while also noting the closure of most special liquidity facilities.
Our reading compares the minutes of the April 27–28 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- Ben S. Bernanke
- James B. Bullard
- William C. Dudley
- Elizabeth A. Duke
- Thomas M. Hoenig ↑ dissented
- Mr. Hoenig dissented because he believed it was no longer advisable to indicate that economic and financial conditions were likely to warrant "exceptionally low levels of the federal funds rate for an extended period." Mr. Hoenig was concerned that communicating such an expectation could lead to the buildup of future financial imbalances and increase the risks to longer-run macroeconomic and financial stability, while limiting the Committee's flexibility to begin raising rates modestly in the near term. Mr. Hoenig believed that the target for the federal funds rate should be increased toward 1 percent this summer, and that the Committee could then pause to further assess the economic outlook. He believed this approach would leave considerable policy accommodation in place to foster an expected gradual decline in unemployment in the quarters ahead and would reduce the risk of an increase in financial imbalances and inflation pressures in coming years. It would also mitigate the need to push the policy rate to higher levels later in the expansionary phase of the economic cycle.
- Donald L. Kohn
- Sandra Pianalto
- Eric S. Rosengren
- Daniel K. Tarullo
- Kevin Warsh
From the minutes
FOMC minutes
Voting for this action: Ben Bernanke, William C. Dudley, James Bullard, Elizabeth Duke, Donald L. Kohn, Sandra Pianalto, Eric Rosengren, Daniel K. Tarullo, and Kevin Warsh.
Voting against this action: Thomas M. Hoenig.
Mr. Hoenig dissented because he believed it was no longer advisable to indicate that economic and financial conditions were likely to warrant "exceptionally low levels of the federal funds rate for an extended period." Mr. Hoenig was concerned that communicating such an expectation could lead to the buildup of future financial imbalances and increase the risks to longer-run macroeconomic and financial stability, while limiting the Committee's flexibility to begin raising rates modestly in the near term. Mr. Hoenig believed that the target for the federal funds rate should be increased toward 1 percent this summer, and that the Committee could then pause to further assess the economic outlook. He believed this approach would leave considerable policy accommodation in place to foster an expected gradual decline in unemployment in the quarters ahead and would reduce the risk of an increase in financial imbalances and inflation pressures in coming years. It would also mitigate the need to push the policy rate to higher levels later in the expansionary phase of the economic cycle.
It was agreed that the next meeting of the Committee would be held on Tuesday-Wednesday, June 22-23, 2010. The meeting adjourned at 12:50 p.m. on April 28, 2010.
What changed from the previous meeting’s minutes
- Participants added projections for 2010-2012 and longer-run for growth, unemployment, and inflation, absent in prior minutes.
- Labor market description changed from "stabilizing" to "beginning to improve," with nonfarm payrolls posting a modest gain in March.
- Policy directive removed instruction to complete agency MBS and debt purchases by end of March, as purchases were completed
- Statement noted TALF closed on March 31 for all collateral except new-issue commercial MBS, replacing prior schedule reference
- Dissent by Hoenig shifted from opposing "extended period" language to advocating raising federal funds rate toward 1 percent this summer
- Participants flagged fiscal strains in Greece and peripheral European countries as weighing on financial conditions, a new risk not in prior minutes
Summary generated automatically from the two documents.