Investing.com - U.S. monetary authorities largely saw the need to continue tapering stimulus programs though they scrapped their strategy suggesting rates may rise when the unemployment rate crosses a 6.5% threshold, the minutes of the Federal Reserve's January policy meeting revealed Wednesday.
At its Jan. 28-29 policy meeting, the Fed voted to trim its monthly asset-purchasing program to $65 billion from $75 billion and stressed benchmark interest rates will stay at 0.00-0.25% until the unemployment rates approaches 6.5% or even dips below that mark, depending on the health of the economy in the context of price stability.
Asset purchases aim to spur recovery by suppressing long-term interest rates, a strategy that sends investors to stocks to spur investing and hiring, thus weakening the dollar as a side effect.
The minutes released on Wednesday, however, revealed that monetary authorities sought to ditch language suggesting rates may rise if the unemployment rate falls past 6.5%, a policy tool known as forward guidance.
"Participants agreed that, with the unemployment rate approaching 6-1/2 percent, it would soon be appropriate for the Committee to change its forward guidance in order to provide information about its decisions regarding the federal funds rate after that threshold was crossed," the minutes reported.
The unemployment rate currently stands at 6.6% though many still remain out of the labor force due to fruitless job searches, which artificially lowers the percentage headline unemployment rate.
Those out of work but not actively seek jobs are not counted as part of the labor force.
Still, members were divided on how to signal to the economy their take on the country's future health, with one camp calling for fresh numbered targets or thresholds and another favoring language.
"Some participants favored quantitative guidance along the lines of the existing thresholds, while others preferred a qualitative approach that would provide additional information regarding the factors that would guide the Committee's policy decisions," the minutes read.
"Several participants suggested that risks to financial stability should appear more explicitly in the list of factors that would guide decisions about the federal funds rate once the unemployment rate threshold is crossed, and several participants argued that the forward guidance should give greater emphasis to the Committee's willingness to keep rates low if inflation were to remain persistently below the Committee's 2 percent longer-run objective."
Elsewhere, Fed officials were willing to overlook January's soft jobs report and other economic indicators taking into account a string of powerful winter storms may have disrupted commerce.
While some hawkish member felt the time to hike interest rates will come soon, consensus pointed to keeping rates on hold while dismantling monthly bond purchases.
"All members agreed that the cumulative improvement in labor market conditions and the likelihood of continuing improvement indicated that it would be appropriate to make a further measured reduction in the pace of its asset purchases at this meeting," the minutes read.
"Members again judged that, if the economy continued to develop as anticipated, further reductions would be undertaken in measured steps."
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.23% at 80.24.