Federal Reserve members found themselves at a crossroads during their pivotal March meeting, torn between hiking rates in June, September—or even waiting until 2016, according to meeting minutes released Wednesday.
Ultimately, the Federal Open Market Committee opted to make a key linguistic move, dropping the word "patient" from previous post-meeting statements concerning the approach to raising interest rates.
While the record showed all but one member agreed with losing "patient," there was less of an accord about how to proceed down the real path of tightening monetary policy.
Members thought it "appropriate" to remove "patient" due to "considerable progress" being made toward achieving the Fed's twin goals of maximum employment and price stability.
They agreed that "an increase in the target range for the federal funds rate remained unlikely at the April FOMC meeting but that language in the Fed's guidance provided the FOMC with " the flexibility to begin raising the target range for the federal funds rate in June or at a subsequent meeting." Language immediately after, though, pointed out that some members believe a rate increase might not be warranted until 2016.
"This dichotomy speaks to the division on the board; they, as a whole, simply aren't sure what they're supposed to be doing right now given the divergent messages from any number of places," Dan Greenhaus, chief strategist at BTIG, said in a note.
The FOMC has kept its target funds rate near zero since late-2008 as it sought to lower borrowing costs and increase liquidity while in the throes of the financial crisis. Three phases of a monthly bond-buying program known as quantitative easing pushed the Fed's balance sheet past $4.5 trillion and resulted in strong stock market gains but only tepid economic growth.