December 11–12 · Published January 3, 2013
BBBen S. BernankeDecember 11–12, 2012 FOMC Minutes
Our reading
The minutes read consistent with the statement because both documents describe the same policy decisions and economic assessments—such as the moderate pace of economic expansion, elevated unemployment, subdued inflation, the continuation of asset purchases ($40 billion in MBS and $45 billion in Treasuries), and the adoption of quantitative thresholds (6.5% unemployment and 2.5% inflation) for forward guidance—with the minutes providing additional detail on the FOMC's deliberations, including the rationale, benefits, costs, and dissenting views behind those decisions.
Our reading compares the minutes of the December 11–12 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 objected to the asset purchases and to the characterization of the conditions under which an exceptionally low range for the federal funds rate would remain appropriate. He continued to view asset purchases as unlikely to add to economic growth without unacceptably increasing the risk of future inflation, and to see purchases of MBS as inappropriate credit allocation. With regard to the funds rate, Mr. Lacker was concerned that linking the forward guidance to a specific numerical level of the unemployment rate would inhibit the effectiveness of the Committee's communications and increase the potential for inflationary policy errors; he preferred qualitative guidance instead.
- 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
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 objected to the asset purchases and to the characterization of the conditions under which an exceptionally low range for the federal funds rate would remain appropriate. He continued to view asset purchases as unlikely to add to economic growth without unacceptably increasing the risk of future inflation, and to see purchases of MBS as inappropriate credit allocation. With regard to the funds rate, Mr. Lacker was concerned that linking the forward guidance to a specific numerical level of the unemployment rate would inhibit the effectiveness of the Committee's communications and increase the potential for inflationary policy errors; he preferred qualitative guidance instead.
It was agreed that the next meeting of the Committee would be held on Tuesday–Wednesday, January 29-30, 2013. The meeting adjourned at 11:25 a.m. on December 12, 2012.
What changed from the previous meeting’s minutes
- The FOMC replaced calendar-date forward guidance with quantitative thresholds of 6.5% unemployment and 2.5% inflation.
- The FOMC added purchases of longer-term Treasury securities at $45 billion per month starting in January.
- The FOMC decided to resume rolling over maturing Treasury securities at auction in January.
- Inflation was described as running somewhat below the 2% objective, rather than at or below it.
- The FOMC noted weather-related disruptions to economic activity, a new factor in the outlook.
- One member dissented specifically opposing the new threshold language, in addition to asset purchases.
Summary generated automatically from the two documents.