December 16–17 · Published January 7, 2015
JYJanet L. YellenDecember 16–17, 2014 FOMC Minutes
Our reading
The minutes read consistent with the statement because they reflect the same key economic assessments and policy decisions, such as moderate economic growth, improving labor markets, below-target inflation due to energy prices, stable survey-based inflation expectations, and the decision to maintain the federal funds rate target range while adopting "patient" forward guidance, with the minutes providing additional detail and discussion on these points.
Our reading compares the minutes of the December 16–17 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- Lael Brainard
- William C. Dudley
- Stanley Fischer
- Richard W. Fisher ↑ dissented
- Mr. Fisher agreed that the Committee should be patient in beginning to normalize the stance of monetary policy. He dissented because he saw the improvement in the U.S. economic outlook since October as indicating that it likely will be appropriate to increase the federal funds rate sooner than the Committee's current statement envisions.
- Narayana Kocherlakota ↓ dissented
- Mr. Kocherlakota dissented because he believed that the Committee's decision and statement did not respond to ongoing below-target inflation and falling market-based measures of longer-term inflation expectations. In his judgment, the credibility of the Committee's 2 percent inflation target was at risk, calling for a more accommodative policy stance.
- Loretta J. Mester
- Charles I. Plosser ↑ dissented
- Mr. Plosser dissented for two reasons. He believed that the Committee's policy guidance should be more data dependent and not focus on time. In his view, the improvement in economic conditions that has occurred over the course of the year was greater than anticipated, and he believed that the statement should communicate that there is a measurable probability that liftoff may occur in the first quarter of next year, even if the most likely scenario is for normalization to begin around midyear. He further believed that waiting too long to raise rates could lead to the need for more-aggressive policy in the future, which could potentially lead to unnecessary volatility and instability.
- Jerome H. Powell
- Daniel K. Tarullo
- Janet L. Yellen
From the minutes
FOMC minutes
Mr. Fisher agreed that the Committee should be patient in beginning to normalize the stance of monetary policy. He dissented because he saw the improvement in the U.S. economic outlook since October as indicating that it likely will be appropriate to increase the federal funds rate sooner than the Committee's current statement envisions.
Mr. Kocherlakota dissented because he believed that the Committee's decision and statement did not respond to ongoing below-target inflation and falling market-based measures of longer-term inflation expectations. In his judgment, the credibility of the Committee's 2 percent inflation target was at risk, calling for a more accommodative policy stance.
Mr. Plosser dissented for two reasons. He believed that the Committee's policy guidance should be more data dependent and not focus on time. In his view, the improvement in economic conditions that has occurred over the course of the year was greater than anticipated, and he believed that the statement should communicate that there is a measurable probability that liftoff may occur in the first quarter of next year, even if the most likely scenario is for normalization to begin around midyear. He further believed that waiting too long to raise rates could lead to the need for more-aggressive policy in the future, which could potentially lead to unnecessary volatility and instability.
It was agreed that the next meeting of the Committee would be held on Tuesday-Wednesday, January 27-28, 2015. The meeting adjourned at 11:00 a.m. on December 17, 2014.
What changed from the previous meeting’s minutes
- The FOMC replaced "considerable time" guidance with "patient" language for beginning policy normalization.
- The asset purchase program conclusion was no longer mentioned as a condition tied to forward guidance.
- Dissents increased from one to three, with Fisher and Plosser joining Kocherlakota.
- The statement added that inflation would rise gradually toward 2 percent as transitory effects dissipate.
- The FOMC noted it continues to monitor inflation developments closely, a new addition.
- Market-based inflation compensation measures declined further over the intermeeting period.
Summary generated automatically from the two documents.