(Reuters) -The Federal Reserve was nearly unanimous in its decision last month to leave its bond-buying program unchanged, but left a wide berth for officials to decide in the future if and when changes should be made, according to minutes of the U.S. central bank’s December policy meeting.
“All participants” agreed the Fed should commit to leaving the program in place until there was “substantial further progress” towards its economic goals, and “nearly all” favored keeping the current mix of assets purchased intact rather than focusing, for example, on longer-term Treasury bonds as some analysts had advocated, said the minutes, which were released on Wednesday.
But in terms of how to judge when “substantial further progress” had been achieved, “participants commented that this judgment would be broad, qualitative, and not based on specific numerical criteria or thresholds.”
That description could offer Fed policymakers wide latitude to change the bond-buying program in coming months in response to what could be a very uncertain environment.
As the minutes were released, a joint session of Congress meant to provide the final certification of President-elect Joe Biden’s victory in the Nov. 3 election was interrupted when swarms of protesters angry over President Donald Trump’s defeat stormed the U.S. Capitol.
The disruption of the typically peaceful transfer of power occurred a day after voters in Georgia appeared to deal the Republican president and his party a second stinging defeat, with one Democrat winning a run-off election for a U.S. Senate seat and another ahead in a second Senate run-off.
Those results put the Democrats, who already have a majority in the U.S. House of Representatives, on the cusp of winning effective control of the Senate, a scenario that could open the door to a massive new economic program that the Fed would need to account for in its outlook.
Congress last month passed a nearly $900 billion relief package to help further stem the economic fallout from the coronavirus pandemic. Biden and his fellow Democrats are expected to try to push another aid package through Congress.
Distribution of a coronavirus vaccine, Fed officials said in the minutes, was also an “upside risk.”
The one requirement Fed policymakers did agree on was the need to flag the central bank’s views about the economy’s progress “well in advance” of the moment when changes in the $120 billion in monthly bond purchases might be warranted.
Indeed, the minutes of the Fed’s Dec. 15-16 meeting showed that even as the country remained mired in a pandemic and recession, officials were already discussing the process for tailoring some of the economic support rolled out last year when the virus began to spread.