The Federal Reserve “should provide additional clarity about its asset purchase program relatively soon,” according to minutes of the June Federal Open Market Committee meeting released Wednesday.
The committee discussed “the eventual normalization” of monetary policy and the Fed's balance sheet, although some participants said the discussion was premature.
At the June 18-19 meetings, FOMC members signaled a willingness to consider raising the federal funds rate, but said that current conditions, and expectations that economic growth would proceed at a moderate pace, led them to keep the federal funds rate at zero to 0.25% and to continue monthly purchases of $40 billion in agency mortgage-backed securities and $45 billion in longer-term Treasury securities.
The minutes indicated that while nominal yields of Treasuries rose sharply since the previous FOMC meeting in May, which market participants interpreted as a signal of an earlier than anticipated end to the Federal Reserve's asset purchase program, economic projections by committee members and staff were “little changed.” The outlook for the future path of the federal funds rate “is subject to considerable uncertainty” as well, according to the minutes.
