Federal Reserve officials agreed during their policy-setting meeting at the beginning of June to deploy their full arsenal to help the U.S. economy recover from the coronavirus-induced downturn.
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The central bank on Wednesday released minutes from its virtual gathering held on June 9 and 10, during which policymakers left interest rates near zero, and in their post-meeting statement, reiterated previous guidance that the benchmark federal fund rate will remain at a range between 0 percent and 0.25 percent "until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
Officials also projected that interest rates will stay near zero through 2022 amid the worst economic catastrophe since the Great Depression.
“Members noted that they expected to maintain this target range until they were confident that the economy had weathered recent events and was on track to achieve the Committee’s maximum-employment and price-stability goals,” the meeting minutes said.
Officials wondered whether the Fed should strengthen the forward guidance that it provides to markets, according to the minutes. Some policymakers said they supported tethering future rate moves to inflation. Just a few said it should be tied to unemployment.
“In particular, 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 purchases of Treasury securities and agency [mortgage-backed securities] as more information about the trajectory of the economy becomes available,” the minutes said.
The Fed has repeatedly said the U.S. economic outlook remains highly uncertain, maintaining that a full recovery hinges on containment of the virus, which has killed more than 127,000 people in the U.S.
Of concern to Fed officials is the possibility of a COVID-19 resurgence later in the year. The minutes noted that the "more pessimistic" outlook for the economy was now no less plausible than the baseline forecast. Members worried that the possibility of a second outbreak could hamper businesses' desire to engage in new projects, rehire workers or make new capital expenditures.