WASHINGTON (5/22/14)--With the economy trending upwards, the Federal Open Market Committee (FOMC) at its meeting last month felt it appropriate to discuss potential approaches to its exit strategy once economic conditions have fully normalized, minutes from the meeting--released Wednesday--showed.
Though no decisions were made about how to deal with the growing stockpile of reserves it's built up through the buyback program--reserves it will have to shave down when the buyback program sunsets-- committee members felt comfortable starting the conversation now so that it could properly communicate their plans to the public as the process drives forward.
"Early communication, in turn, would enhance the clarity and credibility of monetary policy and help promote the achievement of the committee's statutory objectives," the minutes said.
With little change in the economic outlook since its last meeting, meanwhile, the FOMC again chose to taper its asset-purchasing program by $10 billion.
The committee lowered its mortgage-backed security purchases by $5 billion down to $20 billion, and reduced its holdings of longer-term Treasury securities also by $5 billion, down to $25 billion.
"Members again judged that, if the economy continued to develop as anticipated, the committee would likely reduce the pace of asset purchases in further measured steps at future meetings," the minutes said.
Members reiterated their stance that tapering quantitative easing is not on a preset course.
No changes were made to the committee's federal funds rate target or to its forward guidance policies. Last meeting, the FOMC formally altered the way it will develop monetary policy from a quantitative method to qualitative.
The next meeting of the FOMC will be held June 17-18.