WASHINGTON—Members of the Fed’s Open Market Committee view development of the coronavirus vaccine as "favorable for the medium-term economic outlook,” according to minutes released from its December videoconference meeting.
Members of the committee further noted the economic recovery thus far had been stronger than anticipated, but more recent indicators signaled the pace of recovery had slowed.
"The minutes from the FOMC’s December meeting reflect on the committee’s optimism with regard to the overall resiliency of the economy," said Curt Long, NAFCU chief economist and vice president of research. "The biggest downside risk was seen as a delayed or inadequate fiscal response, but that concern has obviously abated. There did not appear to be much support for either lengthening the term or expanding the amount of asset purchases.”
Regarding pace and composition of the committee’s asset purchases, all participants judged that it would be appropriate to continue those purchases at least at the current pace, and nearly all favored maintaining the current composition of purchases.
In addition, participants generally agreed that the asset purchase program as structured was providing very significant policy accommodation.
Other FOMC Meeting Notes
Long noted other key findings from the minutes:
- Participants noted that many small businesses were in especially vulnerable positions and that further fiscal policy support would help such businesses weather the ongoing surge in the pandemic, especially over the coming months
- The unemployment rate had declined further and participants underlined the fact that the labor force participation rate remained below its pre-pandemic level – likely reflecting, in part, health concerns and additional childcare responsibilities associated with online schooling.
The FOMC is expected to meet next Jan. 26-27.