–Second Section, Updating 14:11 ET Story; More Details

Continued:

Likewise with discount window lending: “In light of the Bank of
England’s Funding for Lending Scheme, a couple of participants expressed
interest in exploring possible programs aimed at encouraging bank
lending to households and firms, although the importance of
institutional differences between the two countries was noted.”

The minutes show that the Fed staff lowered its GDP forecast and
that FOMC participants also took a more pessimistic view of the outlook,
although they won’t be formally revising their economic projections
until the Sept. 12-13 meeting.

Finally, the minutes reveal that the FOMC discussed the merits of
various monetary policy rules without resolution.

“A number of participants indicated that such rules have played a
useful role in informing the Committee’s monetary policy deliberations,”
they say. “However, several participants pointed to specific
considerations — including the possible mismeasurement of unobservable
variables, such as potential output, and uncertainty about the
appropriate economic models to use in estimating the magnitude of those
variables — that might limit the usefulness of simple rules both
internally and in public communications.”

“Several participants saw value in examining the performance of
rules across a range of economic models,” the minutes say. “Participants
discussed the case for making adjustments to the prescriptions of simple
policy rules in the current circumstances to take into account various
considerations such as the effective lower bound for the federal funds
rate, the effects of the Committee’s balance sheet policies, and
potential shifts in the dynamics of the economy.”

“Some participants noted that adjustment of standard policy rules
for balance sheet policies would tend to push up the federal funds rate
prescription, while a number of participants indicated that other
factors related to current circumstances may warrant maintaining an
accommodative stance of policy for longer than would be prescribed by
standard rules.”

“With regard to the latter, some participants suggested that
inertial policy rules — that is, rules under which any movements in the
stance of policy tend to be fairly persistent — would be most
appropriate in the current context.”

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** MNI **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,M$$BR$,MT$$$$]