Federal Reserve officials agreed last month that they would begin raising interest rates only when measures of the economy’s health and inflation signalled the time was right.
Minutes of the Fed’s discussions at the Sept. 16-17 meeting showed that they have moved away from linking any rate change to any specific period.
“Several members expressed ‘concern that inflation might persist below the Committee’s objective for quite some time.’ That throws light on the changes to the statement wording, and suggests some acceleration may be needed to sway a majority of members to raising rates,” say CIBC economists in a note to analysts.
The officials were also worried that any change to the wording of the guidance could be misinterpreted as a fundamental shift in the Fed’s stance on interest rates that would trigger an unintended rise in market rates.
“Several members felt the current wording, including the word ‘considerable’ signaled too long an interlude before interest rate lift off,” say the CIBC economists.
For now, the Fed decided to leave unchanged its statement saying that any increase in the short-term rate that it controls would not occur until a “considerable time” after it ends its monthly bond purchases.