Fed Meeting Minutes Show Commitment to Facing COVID-19 Recession

Members of the US Federal Reserve Board have agreed to use all of the tools at their disposal to help push the economy out of recession, as shown by the meeting minutes of their most recent meeting, which took place on June 9-10.

The US economy entered into a recession in February, as a result of the economic impact of the coronavirus (COVID-19) pandemic.

During the meeting, members unanimously voted to maintain the main interest rate near zero, and minutes have shown that they expect to maintain the interest range until they are confident that the economy has surpassed the recent events and is on track to achieve the maximum employment and price stability goals.

Many participants believe that the US economy will likely need support from highly accommodative monetary policy, noting that it will be important in the coming months for the Federal Open Market Committee (FOMC) to provide greater clarity about the path of the federal funds rate and asset purchases.

“A number of participants spoke favorably of forward guidance tied to inflation outcomes that could possibly entail a modest temporary overshooting of the committee’s longer-run inflation goal but where inflation fluctuations would be centered on 2% over time,” according to the meeting minutes.

The COVID-19 outbreak and the measures undertaken to contain its spread were severely disrupting to the economic activity in the United States and abroad, FOMC members indicated.

Although labor market conditions improved in May, “these improvements were modest relative to the substantial deterioration seen over the previous two months,” the minutes read.

The consumer price index notably slowed in April, reflecting the effects of both weak aggregate demand and low energy prices, according to the meeting minutes.

FOMC is holding its next meeting on July 28-29.