Initial comments from Bernanke at a post-meeting July press conference laying out the slowdown set off market anxiety. In his comments, Bernanke laid out the Fed's vision for slowing and eventually stopping its bond purchases, saying that if the economy improves as expect, the Fed would begin to shrink the size of purchases later in 2013, and bring them to a halt sometime the following year. The Dow Jones Industrial Average posted its worst day of the year the day after his comments.
But the minutes indicate that Fed officials believed traders had eventually come to understand the Fed's outlook, and the central bank's emphasis that such a plan would be heavily contingent on incoming economic data. Bernanke had said the Fed would only follow through with its plan if the economy continued to improve as officials expected.
At the same time, the minutes reveal the Fed continues to see the economy is growing, but slowly. While the unemployment rate has been on the decline, Fed officials noted that other data surrounding the labor market, such as the labor force participation rate and the number of part-time workers, suggested "more modest improvement."
Fed officials also continued to see fiscal tightening, brought on by sequester spending cuts and new tax increases, as further pinching economic growth, adding that the those policy shifts restrained spending more than once assumed. Officials also noted that uncertainty about how sequester cuts would ultimately impact the economy, as lawmakers continue to battle over how, or whether, to continue the cuts, "clouded the outlook."