July 31–August 1 · Published August 22, 2012
Statement·Presser·Minutes
BBBen S. BernankeJuly 31–August 1, 2012 FOMC Minutes
Our reading
The minutes are consistent with the statement because they reflect the same key economic assessments and policy decisions, including the noted deceleration in economic activity, slow employment growth, elevated unemployment, subdued inflation, stable inflation expectations, significant downside risks from global financial strains, and the decision to maintain highly accommodative policy with the federal funds rate at 0-1/4 percent through late 2014, while also continuing the maturity extension program.
Our reading compares the minutes of the July 31–August 1 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
- Jeffrey M. Lacker ↑ dissented
- Mr. Lacker dissented because he did not believe that exceptionally low levels for the federal funds rate were likely to be warranted for the length of time specified in the Committee's statement. In his view, significant uncertainty regarding the evolution of economic conditions over the next few years made the future path of interest rates difficult to forecast, and the Committee's statement implied more confidence on this score than justified by the current outlook.
- Dennis P. Lockhart
- Sandra Pianalto
- Jerome H. Powell
- Sarah Bloom Raskin
- Jeremy C. Stein
- Daniel K. Tarullo
- John C. Williams
- Janet L. Yellen
From the minutes
FOMC minutes
The Committee also decided to continue through the end of the year its program to ex-tend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability."
Voting for this action: Ben Bernanke, William C. Dudley, Elizabeth Duke, Dennis P. Lockhart, Sandra Pianalto, Jerome H. Powell, Sarah Bloom Raskin, Jeremy C. Stein, Daniel K. Tarullo, John C. Williams, and Janet L. Yellen.
Voting against this action: Jeffrey M. Lacker.
Mr. Lacker dissented because he did not believe that exceptionally low levels for the federal funds rate were likely to be warranted for the length of time specified in the Committee's statement. In his view, significant uncertainty regarding the evolution of economic conditions over the next few years made the future path of interest rates difficult to forecast, and the Committee's statement implied more confidence on this score than justified by the current outlook.
What changed from the previous meeting’s minutes
- Participants discussed extending forward guidance beyond late 2014, deferring decision to September meeting.
- Many members judged additional monetary accommodation likely warranted fairly soon unless recovery strengthened.
- Participants discussed new large-scale asset purchase program benefits and costs, including Treasury versus agency MBS purchases.
- Some participants favored reducing interest rate on reserve balances; others raised money market concerns.
- Statement changed to say economic activity decelerated somewhat over first half of 2012, from expanding moderately.
- Statement added commitment to provide additional accommodation as needed, replacing prepared to take further action.
Summary generated automatically from the two documents.