Markets Jump on Fed Minutes; Policy to Remain Loose for Some Time

NEW YORK (The Street) - Major U.S. markets jumped after the release of Federal Reserve minutes Wednesday, which showed officials saw a rise in forecast rate hikes as overstating likely policy tightening.

The minutes reinforced that accommodative monetary policy would remain in place for sometime, with little change expected to current cuts of $10 billion a month in its bond buying program.

Some Fed officials noted that rate forecasts "could be misconstrued as indicating a move by the committee to a less accommodative reaction function."

Fenimore Asset Management director of research John Fox said the minutes showed rates would stay low for a while. "The labor market is also getting better, but at a pace below what they want," he said in a phone interview.

"The economy have been improving slowly over the past five years and that slow recovery will continue."

The minutes showed officials were keen to scrap hurdles previously used as a guide for policy tightening.

"Almost all members judged that the new language should be qualitative in nature and should indicate that, in determining how long to maintain the current (low) federal funds rate, the Committee would assess progress, both realized and expected, toward its objectives of maximum employment and 2 percent inflation," the minutes said.

The central bank dropped its jobless and inflation targets at last month's meeting, and said it would wait a "considerable time" after winding up its stimulus program before raising rates.

Commentary from the minutes showed GDP growth was lower in the first half than anticipated by Fed members in January, with severe winter weather seen to account for some of the slowdown.

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