Some members of the Federal Open Market Committee remain concerned about slower-than-expected economic growth in the coming months if foreign economies continue to struggle, said minutes from their late Oct. 28-29 meeting released Wednesday.
At that meeting, committee members agreed to end their bond-buying program, and all but one member agreed to keep the federal funds rate near zero unless presented with “faster-than-expected progress” toward employment and inflation objectives.
Committee members discussed increased downside risks in Europe, China and Japan, plus a strengthening dollar abroad, as factors that could slow economic growth in the U.S.
“That remains a dominant theme for the second month in a row,” said Lindsey Piegza, chief economist with financial services firm Sterne Agee, in an interview. “It was a continuing conversation of the new barriers to rate hikes.” Several participants thought those risks were offset by declining energy prices and lower interest rates, according to the minutes.
Committee members also debated the best way to communicate decisions about changing the federal funds rate, or what they called “post-liftoff policy,” with most agreeing to continue saying that the rate would stay low even after inflation and employment numbers hit their targets.
“It highlights that the Fed is still struggling to communicate to the market. Until they start talking about a specific timeline, we continue to see conversation between the hawks and the doves,” Ms. Piegza said.