Minutes of the July 28-29 FOMC minutes

  • Full text
  • Participants observed that uncertainty surrounding the economic outlook remained very elevated
  • Only saw modest benefits from yield caps, many noted they were 'not warranted' now but should remain an option
  • Fed staff forecasts less robust H2 recovery due to virus case rise
  • "In contrast to the sizable rebound in consumer spending, participants saw less improvement in the business sector in recent months, and they noted that their District business contacts continued to report extraordinarily high levels of uncertainty and risks"

This is the important part of the minutes:

Participants discussed the current stance of monetary policy and the circumstances under which they might increase monetary policy accommodation or clarify their intentions regarding policy. Participants generally judged that the Committee's policy actions over the past several months had provided substantial accommodation; several of them observed that the Committee's asset purchases, which were designed to support financial market functioning and the smooth flow of credit, were likely also providing a degree of policy accommodation. Noting the increase in uncertainty about the economic outlook over the intermeeting period, several participants suggested that additional accommodation could be required to promote economic recovery and return inflation to the Committee's 2 percent objective. Some participants observed that, due to the nature of the shock that the U.S. economy was experiencing, strong fiscal policy support would be necessary to encourage expeditious improvements in labor market conditions.

With regard to the outlook for monetary policy beyond this meeting, a number of participants noted that providing greater clarity regarding the likely path of the target range for the federal funds rate would be appropriate at some point. Concerning the possible form that revised policy communications might take, these participants commented on outcome-based forward guidance-under which the Committee would undertake to maintain the current target range for the federal funds rate at least until one or more specified economic outcomes was achieved-and also touched on calendar-based forward guidance-under which the current target range would be maintained at least until a particular calendar date. In the context of outcome-based forward guidance, various participants mentioned using thresholds calibrated to inflation outcomes, unemployment rate outcomes, or combinations of the two, as well as combinations with calendar-based guidance. In addition, many participants commented that it might become appropriate to frame communications regarding the Committee's ongoing asset purchases more in terms of their role in fostering accommodative financial conditions and supporting economic recovery. More broadly, in discussing the policy outlook, a number of participants observed that completing a revised Statement on Longer-Run Goals and Monetary Policy Strategy would be very helpful in providing an overarching framework that would help guide the Committee's future policy actions and communications.

The bolded touches on all the criticisms of the Fed. They rolled out all the programs saying they were to restore 'market functioning' and now they're reframing them as 'supporting the economic recovery'.

The US dollar has further extended gains after the minutes. Some are pointing to the comments on yield-curve control. That's exactly what policymakers have been saying so that shouldn't come as a surprise but perhaps we're finally getting some kicking and screaming from the market.