September 20–21 · Published October 12, 2011

Statement·Presser·Minutes

September 20–21, 2011 FOMC Minutes

Our reading compares the minutes of the September 20–21 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.

Vote

• Ben S. Bernanke
• William C. Dudley
• Elizabeth A. Duke
• Charles L. Evans
• Richard W. Fisher ↑ dissented
  • Messrs. Fisher, Kocherlakota, and Plosser dissented because they did not support additional policy accommodation at this time. Mr. Fisher saw a maturity extension program as providing few, if any, benefits in support of job creation or economic growth, while it could potentially constrain or complicate the timely removal of policy accommodation. In his view, any reduction in long-term Treasury rates resulting from this policy action would likely lead to further hoarding by savers, with counterproductive results on business and consumer confidence and spending behaviors. He felt that policymakers should instead focus their attention on improving the monetary policy transmission mechanism, particularly with regard to the activity of community banks, which are vital to small business lending and job creation.
• Narayana Kocherlakota ↑ dissented
  • Messrs. Fisher, Kocherlakota, and Plosser dissented because they did not support additional policy accommodation at this time. Mr. Kocherlakota's perspective on the policy decision was again shaped by his view that in November 2010, the Committee had chosen a level of accommodation that was well calibrated for the condition of the economy. Since November, inflation, and the one-year-ahead forecast for inflation, had risen, while unemployment, and the one-year-ahead forecast for unemployment, had fallen. He did not believe that providing more monetary accommodation was the appropriate response to those changes in the economy, given the current policy framework.
• Charles I. Plosser ↑ dissented
  • Messrs. Fisher, Kocherlakota, and Plosser dissented because they did not support additional policy accommodation at this time. Mr. Plosser felt that a maturity extension program would do little to improve near-term growth or employment, in light of the ongoing structural adjustments and fiscal challenges both in the United States and abroad. Moreover, in his view, with inflation continuing to run above earlier forecasts, such a program could risk adding unwanted inflationary pressures and complicate the eventual exit from the period of extraordinarily accommodative monetary policy.
• Sarah Bloom Raskin
• Daniel K. Tarullo
• Janet L. Yellen

From the minutes

Read the full minutes

What changed from the previous meeting’s minutes

• The FOMC announced a maturity extension program to purchase $400 billion of Treasury securities with 6- to 30-year maturities and sell an equal amount with 3 years or less.
• The reinvestment policy changed from reinvesting principal payments on agency debt and MBS in Treasury securities to reinvesting in agency mortgage-backed securities.
• The statement's characterization of economic growth changed from "considerably slower than the Committee had expected" to "remains slow."
• The description of downside risks changed from "have increased" to "there are significant downside risks to the economic outlook, including strains in global financial markets."
• The forward guidance on the federal funds rate was reaffirmed at "at least through mid-2013" without change.
• The dissenting votes remained the same three members (Fisher, Kocherlakota, Plosser), but their stated reasons shifted from opposing the date-specific guidance to opposing additional accommodation.

Summary generated automatically from the two documents.

Source