WASHINGTON
As the U.S. economy continues to boom, Federal Reserve policymakers have weighed an unstable global economy, and the plummeting price of oil ahead of a planned interest rate hike.
Minutes from the Fed’s Dec. 16-17 meeting released Wednesday show that Central Bank representatives reviewed a gamut of economic factors indicating a bustling U.S. economy, but found that the global economy continued to be shaky.
Real GDP declined for a second consecutive quarter in Japan, and made only small gains in the euro zone. Economic growth slowed in Mexico and Brazil, and was also likely to have slowed in China.
The minutes, which were released after a customary three-week delay, said that a continued decrease in the price of crude oil was “likely reflecting favorable supply developments as well as some weakening in global demand.”
The Fed’s policy statement was approved by a 7-3 vote, showing an apparent split ahead of an interest rate hike planned for later this year.
“The Committee judges that it can be patient in beginning to normalize the stance of monetary policy,” read the statement.
“When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent,” it added.
Fed Chair Janet Yellen said in December that the bank was unlikely to boost interest rates until after “a couple of meetings” this year. She said Wednesday that the current rate “remains appropriate.”
The Fed has kept interest rates near zero since 2008’s global economic recession.
The Fed will not be deterred from raising interest rates by current inflation levels, according to Wednesday's minutes.
"With lower energy prices and the stronger dollar likely to keep inflation below target for some time, it was noted that the Committee might begin normalization at a time when core inflation was near current levels," it said.
The December meeting highlighted tensions over language used to convey the Fed’s approach to the rate hike.
“Most participants agreed that it would be useful to state that the Committee judges that it can be patient in beginning to normalize the stance of monetary policy; they noted that such language would provide more flexibility to adjust policy in response to incoming information than the previous language, which had tied the beginning of normalization to the end of the asset purchase program,” the minutes said.
But others in the committee disagreed.
“Some participants regarded the revised language as risking an unwarranted concentration of market expectations for the timing of the initial increase in the federal funds rate target on a narrow range of dates around mid-2015, and as not adequately allowing for the possibility that economic conditions might evolve in a way that could call for either an earlier or a later liftoff date,” the minutes said.
