Fed Officials Saw Global Slowdown Risks to U.S. Outlook

The Fed decided to maintain its forward guidance, indicating low rates for a considerable time post-bond buying program. However, some policymakers anticipated faster rate hikes, causing tension. The Minutes revealed concerns about the 'considerable time' language being misinterpreted as a commitment. Some participants favored numerical thresholds for guidance, but challenges in communication were acknowledged. Potential economic threats like a rising dollar and weaker global growth were discussed, along with exit strategies and changes to the reverse repo facility.

What was the Federal Reserve's initial stance on interest rates after the bond-buying program ended?

• They intended to decrease rates further.

• They had no clear plan for interest rates.

• They decided to maintain low rates for a considerable time.

• They planned to increase rates immediately.

What concern did some Fed participants have about the 'considerable time' language in the forward guidance?

• It was not aggressive enough.

• It was too aggressive.

• It was too vague and unclear.

• It might be seen as a commitment.

Why did some Fed participants favor a cautious approach in adjusting forward guidance?

• To counteract a rising dollar.

• To align with European economic policies.

• Because of risk management considerations.

• Due to high inflation rates.

What was one of the challenges mentioned regarding the use of numerical thresholds in forward guidance?

• They are too easy to communicate.

• They might not accurately reflect economic conditions.

• They are universally accepted.

• They simplify the policy outlook.

What economic threat did the Fed discuss in relation to their forward guidance?

• Rising unemployment rates.

• Increasing oil prices.

• Weaker economic growth in Europe.

• A declining dollar.