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Oct 17, 2018

"Almost all" Fed officials supported removal of "accommodative" language

Courtenay Brown
Federal Reserve Chairman Jerome Powell standing at a podium at a press conference.

Fed chairman Jerome Powell at a press conference in September. Photo: Saul Loeb/AFP via Getty Images

The decision to remove the long-standing "accommodative" language from the Federal Reserve's policy statement was not unanimous among officials, according to the minutes from the Fed's latest policy meeting.

Why it matters: There was a ton of speculation that dropping the language meant the Fed was getting closer to a neutral rate, which would not speed or slow economic growth. Per the minutes, officials argued that waiting to revise the statement would convey a "false sense of precision" about the neutral rate. They also thought the decision would fail to "signal a change" in the expected interest rate hike path.

Other key takeaways:

  • Fed officials said that a "gradual approach" of raising rates would prevent moving too fast or too slow. (For the record, President Trump thinks they are already moving too fast.)
  • Officials said the trade war with China is "judged to have only a small net effect on real GDP growth over the next few years."
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