The Federal Open Market Committee debated whether the current language painted the wrong picture on the timing of rate hikes, with the outcome being agreement that rate hikes would depend on data and not a calendar date, according to minutes released Wednesday.
Fed staff also cut their growth outlook due to the higher dollar, as a number of committee participants expressed concern about global weakness. Most members of the committee want the current guidance clarified to emphasize that the timing of a rate hike is data dependent, according to the minutes. Concerns were raised that the current language could be misunderstood as a commitment.
“The concern was raised that the reference to ‘considerable time’ in the current forward guidance could be misunderstood as a commitment rather than as data dependent,” the minutes said. “It was emphasized that the current forward guidance for the federal funds rate was data dependent and did not indicate that the first increase in the target range for the federal funds rate would occur mechanically after some fixed calendar interval following the completion of the current asset purchase program,” the statement added.
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