Fed's Doves Speaking Up

Last month's two-day meeting, the first convened under new Chairman Ben Bernanke, ended with the official fed funds rate going to 4.75%, its highest level since April 2001. In an accompanying policy statement, the committee retained language stating that further tightening might be needed, depending on incoming data.

"The committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance," the FOMC said on March 29 in a reprise of previous language. In another dovish gesture highlighting the proximity of "neutral" policy, the Fed said on March 29 that "economic growth has rebounded strongly in the current quarter but appears likely to moderate to a more sustainable pace."

Apparently, the latter statement was a matter of some controversy.

"With regard to the committee's announcement to be released after the meeting, members expressed some difference in views about the appropriate level of detail to include in the statement. In the end, they concurred that the statement should note that economic growth had rebounded in the current quarter but that it appeared likely to moderate to a more sustainable pace in coming quarters," the minutes say.

"Policymakers agreed that the announcement should also highlight the favorable outlook for inflation and summarize their reasons for that assessment, but that it should reiterate that possible increases in resource utilization, along with elevated levels of commodity and energy prices, had the potential to add to inflation pressures," they said.