Newly released minutes of the central bank's April meeting show the Open Market Committee acting like the economist with a million arms: On the one hand, first-quarter economic data were poor, but on the other there are reasons to think it won't last.
On net, the Fed appears to be more bullish, with the minutes at least twice citing the long-awaited movement in personal income and some measures of wages as a key reason for not sweating the near-recessionary pace of first-quarter growth.
The only specific mention of the timing of a rate hike was a mention that "a few" members wanted to raise rates beginning in June despite the weak first half of the year. But that the majority squelched the idea in favor of a meeting-by-meeting approach that will let policy makers weigh new data each time the committee meets through year-end. The committee also rejected suggestions from unnamed members that the Fed give a more explicit signal that the first hike in the Fed Funds rate since 2006 would be coming soon.
"The message is that while they think it's only temporary, they want to be shown it's only temporary" before raising rates, said Joel Naroff, president of Naroff Economic Advisors. "By September there will be four jobs reports and we will clearly know if it's temporary.''