Minutes show the US economy is expected to need support 'for some time'
Washington —
YCT refers to yield caps or targets, a strategy of limiting the yields on government bonds at specific maturities. It’s a tool some central bankers believe can help reinforce an existing commitment to hold policy rates low for an extended period, as the Fed is already doing. “Most participants said that the committee should communicate a more explicit form of forward guidance for the path of the federal funds rate and provide more clarity regarding” asset purchases, according to the record of the meeting.
FOMC members showed differing views on what precisely should inform their future policy moves, though they “generally indicated support for outcome-based forward guidance.”A “number” of officials favoured tying future policy moves to inflation. That could involve waiting for “a modest temporary overshooting of the committee’s longer-run inflation goal” of 2%.
Officials also highlighted “significant uncertainty and downside risks associated with the pandemic.” They also appeared willing to nudge lawmakers towards passing additional stimulus.“Among the other sources of risk noted by participants were that fiscal support for households, businesses and state and local governments might prove to be insufficient,” the minutes said.
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