When Federal Reserve Chair Janet Yellen recently waded into murkier waters, she was backed by broad support from her colleagues.
The Fed has two objectives: to keep U.S. unemployment low and to keep prices stable.
The goal is to get unemployment below 6.5% and inflation up to 2.5%.
In March, the Fed decided to tweak those thresholds to a fuzzier "qualitative view" of the job market. Yellen has indicated the Fed will be looking at a "dashboard" of far more economic indicators to gauge the health of the job market.
That spooked markets last month. Investors didn't know how to interpret this new approach, and they feared it meant rates would rise sooner rather than later. So there was a lot of anticipation to see the normally boring minutes of a Fed meeting.
Those minutes, released Wednesday, show that the decision had strong support among Fed officials. "Almost all participants" agreed it was the right time for the Fed to change its public statements, given the unemployment rate was likely to fall to its 6.5% goal soon. Furthermore, "most participants" preferred replacing that numerical goal with "qualitative" guidance instead, the minutes said.
In other words, it was a team play, and it was done because of lingering concerns about job market health.
The Fed has been stimulating the U.S. economy for more than five years, by keeping interest rates low and by buying bonds. Until recently, it was clear that it would not raise its key short-term interest rate until the U.S. economy reached its numeric goals.
Now officials, including Yellen, are concerned that the job market is still far from fully healed.
There are still too many people who are long-term unemployed or working part-time because they can't find full-time work.
Among the other concerns keeping Fed officials up at night: wages are flat, the labor force participation rate remains low, and few workers are confident enough in the job market to quit their jobs in pursuit of new opportunities.
The Fed minutes show some officials are also concerned about the housing recovery losing some steam, more loans starting to flow to less credit-worthy households, and China's economic slowdown impacting the broader global economy.
All that said, they saw little reason to change their outlook for the U.S. economy overall. This should assuage investors who were concerned about faster rate hikes.
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