FOMC: Discusses exit strategy, need for further stimulus

Fed June meeting minutes show all but one official agreed on key elements of exit strategy while making clear that the discussion "did not imply that a move toward such normalization would necessarily begin sometime soon".

The Committee considered a set of specific principles that would guide its strategy of normalizing the stance and conduct of monetary policy. The suggested order of an exit is first to cease reinvesting principal on bonds it holds, and then either simultaneously or soon after change the forward guidance on the federal funds rate, followed by raising the target for federal funds rate, then selling agency securities after the first hike.

However, a few Fed officials suggested that the central bank may have to consider further stimulus measures instead if growth remains too slow. "Participants also discussed the medium-term outlook for monetary policy. Some participants noted that if economic growth remained too slow to make satisfactory progress toward reducing the unemployment rate and if inflation returned to relatively low levels after the effects of recent transitory shocks dissipated, it would be appropriate to provide additional monetary policy accommodation", the Federal Open Market committee said in the minutes of its June 21-22 meeting.