By Yasin Ebrahim
Investing.com - Federal Reserve policymakers agreed that current monetary policy measures were appropriate to support the economic recovery as the risks to the outlook remained tilted to the downside, the minutes of the Fed's September meeting showed on Wednesday.
"The information available at the time of the September 15–16 meeting suggested that U.S. real GDP was rebounding at a rapid rate in the third quarter. Labor market conditions continued to improve markedly in July and August, but employment was still below its level at the beginning of the year," The minutes showed. "Fiscal policy measures, along with the support from monetary policy and the Federal Reserve's liquidity and lending facilities, were expected to continue supporting the second-half recovery, although the recovery was forecast to be far from complete by year-end. The staff's forecast assumed the enactment of some additional fiscal policy support this year; without that additional policy action, the pace of the economic recovery would likely be slower."
At its previous meeting, the Fed held interest rates steady in the range of 0% to 0.25% and signaled no hikes through 2023.
The minutes of the meeting showed there was a consensus among members to keep policy accommodative until the economy has achieved maximum employment and inflation is on track to moderately exceed 2 percent for some time.
The minutes come a day after hopes that U.S. lawmakers will roll out broad-based stimulus sooner rather than later were dealt a blow. President Donald Trump on Tuesday rejected U.S. House Speaker Nancy Pelosi's $2.4 trillion stimulus proposal, though vowed to pass a "major" stimulus should he emerge victorious in the upcoming election. Trump, however, said he was ready to sign separate stimulus packages.
Federal Reserve chairman Jerome Powell on Tuesday warned Congress over the economic fallout of delivering a stimulus package that was too small.
"Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses," Powell said in a speech at a virtual annual meeting held by the National Association for Business Economics. "Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth."
The Fed's September meeting also marked the central bank's adoption of its new inflation measure allowing prices to overshoot its 2% target for a period of time.
Ahead of the release, Dallas Fed President Robert Kaplan, who voted against the Fed's decision to leave rates unchanged last month said he was wary of keeping rates at zero even if unemployment and inflation meet the central bank's targets.
“With the new framework and our inflation targets, I think we’re going to be more accommodative than we have been in the past, but I don’t know if we want to be committing to keeping rates at zero until we meet these targets,” Kaplan told CNBC in an interview.