The Federal Reserve was not trying to signal a more restrictive policy stance last week when it dropped a set of guideposts it had used to help the public anticipate when it will finally start raising rates, a top Fed official said.
Fed Chair Janet Yellen set off a swift drop in stocks and bonds on Wednesday when she suggested in a brief off-script moment at a press conference that an interest rate hike could come in little more than a year's time, earlier than many investors had thought.
"The committee's intention is not to move to a less accommodative policy," Minneapolis Fed President Narayana Kocherlakota told The Wall Street Journal on Friday, referring to the Federal Open Market Committee, which sets policy for the U.S. central bank.
Special: Free Stuff and Great Bargain Adventures for Seniors!
Indeed, the central bank said as much in the statement it released on Wednesday after its two-day policy-setting meeting.
"The change in the Committee's guidance does not indicate any change in the Committee's policy intentions as set forth in its recent statements," it said.
Kocherlakota dissented on the decision, saying he felt that dropping the Fed's promise to hold rates low until the unemployment rate reaches a specific milestone, as long as inflation does not get out of hand, ate away at the Fed's credibility.
© 2021 Thomson/Reuters. All rights reserved.