FOMC minutes: Keeping rates low for a long time could exacerbate imbalances in financial sector

According to the minutes from the Federal Open Market Committee's (FOMC) December 10-11 monetary policy meeting, a few policymakers raised concern that keeping rates low for a long time could exacerbate imbalances in the financial sector.

The publication also showed that policymakers judged it was appropriate to keep rates steady and regarded current rate stance as likely to remain appropriate "for a time."

The US Dollar Index rose slightly on FOMC minutes and was last up 0.05% on the day at 96.85. 

Key takeaways

"Many Fed policymakers saw risks to the economic outlook as tilted to the downside but that some risks had eased in recent months."

"More sanguine view of risks owed to easing US-China trade tensions, lesser probability of no-deal Brexit, stabilizing global growth."

"Various policymakers remarked on topics for discussion at future meetings, including potential role of a standing repo facility."

"Policymakers agreed would not reaffirm existing statement on long-run goals in January 2020; expected to revisit in mid-2020."

"Fed staff member briefed policymakers on the risk that future treasury bill purchases could have a larger effect on liquidity."f

"Fed staff member also discussed expectations to gradually transition away from active repo operations next year."