WASHINGTON (MNI) – The following is the Federal Open Market
Committee text excerpt of the minutes of the Federal Open Market
Committee videoconference held Oct. 15 to discuss communications issues,
published Tuesday:
Notation Vote
By notation vote completed on October 8, 2010, the
Committee unanimously approved the minutes of the
FOMC meeting held on September 21, 2010.
Videoconference Meeting of October 15
The Committee met by videoconference on October 15 to discuss
issues associated with its monetary policy framework, including
alternative ways to express and communicate the Committee’s objectives,
possibilities for supplementing the Committee’s communication about its
policy decisions, the merits of smaller and more frequent adjustments in
the Federal Reserve’s intended securities holdings versus larger and
less frequent adjustments, and the potential costs and benefits of
targeting a term interest rate. The agenda did not contemplate any
policy decisions and none were taken. Participants agreed that greater
public understanding of the Committee’s interpretation of its statutory
objectives could contribute to better macroeconomic outcomes.
Participants expressed a range of views about the potential costs and
benefits of quantifying the Committee’s interpretation of its statutory
mandate to promote price stability by adopting a numerical inflation
objective or a target path for the price level. In the end, participants
noted that the longer-run projections contained in the Summary of
Economic Projections, which is released once per quarter in conjunction
with the minutes of four of the Committee’s meetings, convey
considerable information about participants’ assessments of their
statutory objectives. Participants discussed whether it might be useful
for the Chairman to hold occasional press briefings to provide more
detailed information to the public regarding the Committee’s assessment
of the outlook and its policy decisionmaking than is included in
Committee’s short postmeeting statements.
In their discussion of the relative merits of smaller and more
frequent adjustments versus larger and less frequent adjustments in the
Federal Reserve’s intended securities holdings, participants generally
agreed that large adjustments had been appropriate when economic
activity was declining sharply in response to the financial crisis. In
current circumstances, however, most saw advantages to a more
incremental approach that would involve smaller changes in the
Committee’s holdings of securities calibrated to incoming data. Finally,
participants discussed the potential benefits and costs of setting a
target for a term interest rate. Some noted that targeting the yield on
a term security could be an effective way to reduce longer-term interest
rates and thus provide additional stimulus to the economy. But
participants also noted potentially large risks, including the risk that
the Federal Reserve might find itself buying undesirably large amounts
of the relevant security in order to keep its yield close to the target
level.
William B. English
Secretary
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