September 12–13 · Published October 4, 2012
BBBen S. BernankeSeptember 12–13, 2012 FOMC Minutes
Our reading
The minutes are consistent with the statement because they both describe the same economic conditions (moderate growth, slow employment, elevated unemployment, subdued inflation) and detail the same policy actions (purchasing $40 billion in agency MBS per month, continuing the maturity extension program, and maintaining the federal funds rate at 0-1/4% through mid-2015), with the minutes providing a more detailed discussion of the rationale and deliberations behind these decisions.
Our reading compares the minutes of the September 12–13 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 believed that additional monetary stimulus at this time was unlikely to result in a discernible improvement in economic growth without also causing an unwanted increase in inflation. Moreover, he expressed his opposition to the purchase of more MBS, because he viewed it as inappropriate for the Committee to choose a particular sector of the economy to support; purchases of Treasury securities instead would have avoided this effect. Finally, he preferred to omit the description of the time period over which exceptionally low levels for the federal funds rate were likely to be warranted.
- 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
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015."
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 believed that additional monetary stimulus at this time was unlikely to result in a discernible improvement in economic growth without also causing an unwanted increase in inflation. Moreover, he expressed his opposition to the purchase of more MBS, because he viewed it as inappropriate for the Committee to choose a particular sector of the economy to support; purchases of Treasury securities instead would have avoided this effect. Finally, he preferred to omit the description of the time period over which exceptionally low levels for the federal funds rate were likely to be warranted.
What changed from the previous meeting’s minutes
- The FOMC began purchasing agency mortgage-backed securities at $40 billion per month.
- Forward guidance extended from "at least through late 2014" to "at least through mid-2015".
- Statement added that a highly accommodative stance will remain appropriate for a considerable time after recovery strengthens.
- Members agreed additional accommodation was warranted; previously many expected it would be needed fairly soon.
- Lacker's dissent shifted from opposing the rate guidance duration to opposing asset purchases and MBS sector choice.
- The directive added authority for dollar roll and coupon swap transactions.
Summary generated automatically from the two documents.