FOMC Minutes: Why Were Policymakers Divided?



FOMC minutes

The Federal Open Market Committee’s (or FOMC) meeting minutes from its March policy meeting were released after a gap of three weeks on April 6. In the March policy meeting, policymakers decided to maintain the target range of 0.25%–0.50% for the federal funds rate.

Several of the members of the committee expressed fear of subdued domestic inflation while external risks to the US economic outlook remained a major concern. The overall tone of the meeting was dovish, and the chances of implementing another tightening move during their April 26–27 policy meeting are also grim. After the announcement, long-term Treasuries (PRULX) (TLT) barely reacted. Short-term Treasuries (OPIGX) saw a decline in yields. Meanwhile, banking stocks such as Citigroup (C), Wells Fargo (WFC), and Bank of America (BAC) fell for the day.

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Divided opinion

The members of the FOMC were divided in the committee’s most recent policy meeting. The minutes said, “Many participants expressed a view that the global economic and financial situation still posed appreciable downside risks to the domestic economic outlook.”

The majority of members supported chair Janet Yellen’s position against a rate hike in April. However, there were a few members who thought that the economy was in good enough shape to absorb another rate hike. They were of the opinion that the steady job growth and rise in consumer price inflation make the case for tightening.

Only two members, Kansas City Fed president Esther George and an unidentified member, wanted to hike rates at the March meeting.

From the next article onwards, we’ll look at Treasury bill auctions last week.


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