Fed officials unconvinced on need for yield-curve control – minutes

Federal Reserve officials had "many questions" about the benefits of yield-curve control when they discussed its pros and cons during their meeting in early June.

"Many participants remarked that, as long as the committee's forward guidance remained credible on its own, it was not clear that there would be a need for the committee to reinforce its forward guidance with the adoption of a YCT policy," minutes published Wednesday of the June 9-10 Federal Open Market Committee meeting showed. YCT refers to yield caps or targets.

U.S. central bankers left interest rates near zero at the session, which was conducted via video conference. They also agreed to keep purchasing Treasury and mortgage-backed bonds at a pace of about $120 billion a month.

In a news conference that followed, Fed Chairman Jerome Powell said officials were "not even thinking about thinking about raising rates."

The minutes showed that various participants viewed the economy needing support "for some time" and that the central bank should strive to communicate clearly on the outlook for policy at upcoming meetings.

"Most participants commented that the committee should communicate a more explicit form of forward guidance for the path of the federal funds rate and provide more clarity regarding" asset purchases.

Mr. Powell on Tuesday told lawmakers the U.S. economy had begun to rebound from the coronavirus pandemic sooner than expected, but that the outlook was "extraordinarily uncertain and will depend in large part on our success in containing the virus."

"While this bounce back in economic activity is welcome, it also presents new challenges — notably, the need to keep the virus in check," he said in testimony before the House Financial Services Committee.