FOMC members agree policy should remain at restrictive stance for ‘some time’

Minutes from the joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System held on October 31-November 1 state in part: “Amid these economic conditions, all participants judged it appropriate to maintain the target range for the federal funds rate at 5 to 51/2% at this meeting. Participants judged that maintaining this restrictive stance of policy at this meeting would support further progress toward the Committee’s goals while allowing more time to gather additional information to evaluate this progress. All participants agreed that it was appropriate to continue the process of reducing the Federal Reserve’s securities holdings, as described in the previously announced Plans for Reducing the Size of the Federal Reserve’s Balance Sheet. In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be kept sufficiently restrictive to return inflation to the Committee’s 2% objective over time. All participants agreed that the Committee was in a position to proceed carefully and that policy decisions at every meeting would continue to be based on the totality of incoming information and its implications for the economic outlook as well as the balance of risks. Participants noted that further tightening of monetary policy would be appropriate if incoming information indicated that progress toward the Committee’s inflation objective was insufficient… All participants judged that it would be appropriate for policy to remain at a restrictive stance for some time until inflation is clearly moving down sustainably toward the Committee’s objective. Participants also observed that the continuing process of reducing the size of the Federal Reserve’s balance sheet was an important part of the overall approach to achieving their macroeconomic objectives. A few participants noted that the process of balance sheet runoff could continue for some time, even after the Committee begins to reduce the target range for the federal funds rate. Several participants commented on the recent decline in the use of the ON RRP facility, noting that the use of the facility had been responsive to market conditions.”