WASHINGTON (4/10/14)--It appears the Federal Open Market Committee (FOMC), which released minutes Wednesday from its two-day meeting March 18-19, isn't chomping at the bit to raise the federal interest rate.
Despite unemployment numbers nearing levels at which the FOMC had said could trigger increases to that rate, a lack of confidence in the overall health of the economy could force the committee to hold off.
In light of this, broad support was shown during the meeting for altering the committee's approach in the way it would make policy decisions moving forward.
Previously, the Federal Reserve's monetary policymaking body expressed that once the national unemployment rate dropped below 6.5%, the federal interest rate would begin to climb.
But pulling back on that strategy, which Janet Yellen, newly seated chair of the committee, indicated would likely be the case in the short-term, formalized a shift to a qualitative, rather than a quantitative, approach to guidance.
"This change in our guidance does not indicate any change in the committee's policy intentions as set forth in its recent statements," Yellen said in a press conference after last month's meeting. "(But) rather the change is meant to clarify how the committee anticipates policy evolving after the unemployment rate declines below 6.5%."
While the FOMC may hesitate to raise the federal interest rate, it appears it will stick with the ongoing wind-down of asset purchases, a practice it has maintained since the outset of the recession in an attempt to stimulate the economy.
Yellen said the Fed will buy $55 billion in securities next month, down $10 billion from the current rate. The FOMC has said it will drop that number every time the body meets.
"If incoming information broadly supports the committee's expectation of ongoing improvement in labor markets and inflation moving back over time toward its longer run objective, the committee will likely continue to reduce the pace of asset purchases in measured steps at future meetings," Yellen said.