This afternoon, the Federal Reserve released minutes from its mid-June meeting, providing a slightly more detailed picture of what chair Janet Yellen and her colleagues are thinking about the future of interest rates and monetary policy.
The June meeting itself had been a big shrug: The economy was getting better but not quickly enough to justify raising short-term interest rates; the Fed also said it would continue slowly tapering “quantitative easing,” the massive program of bond buying that’s meant to ease credit and stoke economic growth.
But here are three new things we’ve learned from the minutes.
1) Look for “quantitative easing” to end in October
We already kind of knew this, since the Fed has been reducing its purchases as a steady rate, but the minutes fill in a detail:
Bear in mind that this just means the Fed will stop buying bonds. It will still own over $4 trillion worth of them.
2) The Fed is divided about how to read inflation data
In a press conference after the meeting, Yellen said that although inflation seemed to be picking up a bit, the numbers were too “noisy” to conclude that inflation would go above the Fed’s 2% target for long.
The minutes of the meeting suggest that the other Fed governors and regional Fed presidents are divided on this. Some are worried that inflation is still far too low, indicating an economy that’s still too slack. And it looks like the recent strong jobs numbers, released after the meeting, which brought unemployment down to 6.1%, won’t change the minds of the inflation doves.
But there’s still a vocal hawk team. Although price increases are very low, their main concern is that the Fed won’t be able to react fast enough when the economy turns.
3) The Fed is worried that it’s being taken for granted.
What’s the problem with that? There’s always concern that easy policy will stoke an asset bubble. But Yellen has said that while she’s keeping this on her radar, it’s not a major concern yet. One good reason to think so: The housing market, the source of the really dangerous bubbles, is hardly frothy.
4) The labor market still looks weaker than it should be.
Although unemployment is down, some participants in the Fed meeting feel that many workers are still struggling to find work—they note that many workers have dropped out of the labor force altogether—and those with jobs still aren’t in a strong position to demand higher wages.