March 18–19 · Published April 9, 2014
JYJanet L. YellenMarch 18–19, 2014 FOMC Minutes
Our reading
The minutes are consistent with the statement because they document the FOMC's discussion and agreement on the exact policy actions and forward guidance changes that are summarized in the statement, including the reduction in asset purchases and the updated qualitative guidance for the federal funds rate.
Our reading compares the minutes of the March 18–19 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- William C. Dudley
- Richard W. Fisher
- Narayana Kocherlakota • dissented
- Mr. Kocherlakota dissented because, in his view, the new forward guidance in the fifth paragraph of the statement would weaken the credibility of the Committee's commitment to its inflation goal by failing to communicate purposeful steps to more rapidly increase inflation to the 2 percent target and by suggesting that the Committee views inflation persistently below 2 percent as an acceptable outcome. Moreover, he judged that the new guidance would act as a drag on economic activity because it provided little information about the desired rate of progress toward maximum employment and no quantitative measure of what constitutes maximum employment, and thus would generate uncertainty about the extent to which the Committee is willing to use monetary stimulus to foster faster growth. Mr. Kocherlakota strongly endorsed the sixth paragraph of the statement because providing information about the Committee's intentions for the federal funds rate once employment and inflation are near mandate-consistent levels should help stimulate economic activity by reducing uncertainty.
- Sandra Pianalto
- Charles I. Plosser
- Jerome H. Powell
- Jeremy C. Stein
- Daniel K. Tarullo
- Janet L. Yellen
From the minutes
FOMC minutes
Voting for this action: Janet L. Yellen, William C. Dudley, Richard W. Fisher, Sandra Pianalto, Charles I. Plosser, Jerome H. Powell, Jeremy C. Stein, and Daniel K. Tarullo.
Voting against this action: Narayana Kocherlakota.
Mr. Kocherlakota dissented because, in his view, the new forward guidance in the fifth paragraph of the statement would weaken the credibility of the Committee's commitment to its inflation goal by failing to communicate purposeful steps to more rapidly increase inflation to the 2 percent target and by suggesting that the Committee views inflation persistently below 2 percent as an acceptable outcome. Moreover, he judged that the new guidance would act as a drag on economic activity because it provided little information about the desired rate of progress toward maximum employment and no quantitative measure of what constitutes maximum employment, and thus would generate uncertainty about the extent to which the Committee is willing to use monetary stimulus to foster faster growth. Mr. Kocherlakota strongly endorsed the sixth paragraph of the statement because providing information about the Committee's intentions for the federal funds rate once employment and inflation are near mandate-consistent levels should help stimulate economic activity by reducing uncertainty.
It was agreed that the next meeting of the Committee would be held on Tuesday-Wednesday, April 29-30, 2014. The meeting adjourned at 10:05 a.m. on March 19, 2014.
What changed from the previous meeting’s minutes
- Asset purchase pace reduced from $35B to $30B monthly for Treasuries and $30B to $25B for MBS.
- Forward guidance replaced numerical unemployment and inflation thresholds with qualitative description.
- Added language that federal funds rate may stay below longer-run normal after employment and inflation near mandate-consistent levels.
- Statement noted economic growth slowed during winter months due to adverse weather.
- Narayana Kocherlakota dissented, opposing new forward guidance for weakening inflation commitment.
- Statement clarified new guidance did not indicate change in policy intentions.
Summary generated automatically from the two documents.