ARLINGTON, Va.—Minutes from the Federal Open Market Committee's (FOMC) September videoconference meeting reflect a positive outlook on economic progress since the beginning of the coronavirus pandemic, but members are concerned over the uncertainty related to additional relief and stimulus from Congress.
The Fed said such stimulus would "help sustain the recovery in household spending.”
"The minutes from the FOMC’s September meeting reflect a positive review of economic progress since the pandemic began, but also serious concerns over cuts to fiscal support," said NAFCU Chief Economist Curt Long. "The unveiling of a new monetary policy framework already meant that the FOMC was committed to zero rates for the long haul, but it gets even longer without substantial support from Congress."
As CUToday.info reported, the committee held the federal funds target rate at its current range of 0 to 0.25 percent following its July meeting and has indicated rates will remain in that range for the next several years.
Concern Over Expiration of Benefits
Of note, the minutes show members expressed concern about the expiration of enhanced unemployment insurance benefits – provided by the CARES Act – and many members explained that their economic outlook was made on the assumption that there would be additional fiscal support.
Members of the committee suggested that the pace of recovery could be "slower than anticipated," if additional support is significantly smaller or arrives significantly later than expected.
As CUToday.info also reported, President Donald Trump initially instructed administration representatives to stop working with House Speaker Nancy Pelosi (D-CA) on another coronavirus relief package until after the November election, but changed course Thursday.
Other Key Findings
Long said other key findings from the minutes:
- The pace of employment gains was generally larger than anticipated, but the labor market remains a long way from being fully recovered
- The current target range would be appropriate to maintain until FOMC members are confident that the economy had weathered recent events and was on track to achieve the committee’s maximum employment and price stability goals
- With inflation running persistently below its longer-run goal, participants judged that it would be appropriate to aim to achieve inflation moderately above 2% for some time
The FOMC is expected to meet next Nov. 4-5.