Federal Reserve officials agreed at their last meeting that the economy will likely need record-low interest rates for some time, even as they tried to step away from long-running stimulus.
Minutes from the March 18-19 meeting released Wednesday reveal that Fed officials extensively debated how to communicate to markets that, while it was reducing the size of monthly bond purchases that long served as added stimulus, the central bank would not be increasing interest rates until it was convinced the economy was ready for it.
But the minutes show several officials were concerned that markets could read that information as a shift toward less accommodative policy, which several officials believed would be “overstated.”
Fed officials believed the economy took a hit during particularly cold winter months, but that, overall, it and the labor market were slowly improving. However, the minutes also show that Fed officials were split on exactly how much slack remains in the labor market and how easily the jobless rate could continue to fall as the economy improved.
That debate came as the Fed did away with an unemployment rate threshold it had previously used to help markets anticipate when the Fed might begin to raise rates.
The minutes reveal that the Fed held a previously unknown meeting on March 4, two weeks before the publicly scheduled meeting. There, officials met via videoconference to discuss scrapping a threshold it previously set that was widely seen as outdated.
At the end of 2012, the Fed said it anticipated it would keep rates near zero, until the unemployment rate dipped to 6.5 percent. However, a rapid decrease in the jobless rate in recent months brought the Fed near that threshold, even as most observers believed the central bank was nowhere near prepared to hike rates.
At the March meeting, the Fed eliminated that numerical threshold, and instead said it would be viewing a range of factors in assessing monetary policy going forward.
The minutes show officials agreed the number had become “outdated” and favored a shift away from hard numbers to lay out the Fed’s future plans.
The minutes show that one official did not want to do away with the 6.5 percent threshold until the Fed actually eclipsed that number — the jobless rate is currently 6.7 percent.