WASHINGTON, July 12 (UPI) -- The U.S. Federal Reserve Board outlined exit strategy principles for normalizing the nation's monetary policy, meeting minutes released Tuesday said.
"Participants discussed several specific elements of the principles, including how they should characterize the monetary policy framework that the [Federal Open Market Committee] would adopt" to exit from its easy monetary policy, although the panel didn't say when it would occur, the minutes of the June 21-22 Federal Open Market Committee meeting just released indicated.
The minutes indicated the committee would determine the timing and pace of the exit strategy "to promote its statutory mandate of maximum employment and price stability."
During normalization, adjustments to the interest rate on excess reserves and to the level of reserves in the banking system will be used to bring the funds rate toward its target, the minutes said.
Once economic conditions become more stable, the committee will begin raising its target for the federal funds rate, the minutes said. After that, changing the level or range of the federal funds rate target will be the primary way to adjust the monetary policy.
Fed policymakers also disagreed on whether additional monetary stimulus would be needed, even if the outlook for growth remained anemic.
"A few members noted that, depending on how economic conditions evolve, the committee might have to consider providing additional monetary stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run," the minutes said.
However, several members said they considered an increase in inflation risks "as suggesting that economic conditions might well evolve in a way that would warrant" the FOMC taking action sooner rather than later.
The committee also discussed concerns about the effects of Greece's debt on other eurozone countries.
"In the advanced foreign economies, most central banks left their policy rates unchanged, and the anticipated pace of monetary policy tightening indicated by money market futures quotes was pared back," the committee said. "However, central banks in several emerging market economies continued to tighten policy, and the monetary authorities in China increased required reserve ratios further."
