Minutes: Fed Members Worried About Global Headwinds, Strong Dollar

(RTTNews) - Members of the Federal Reserve are worried about global economic weakness and the impact of a stronger U.S. dollar, according to the minutes of the September 16-17 meeting released Wednesday.

At that meeting, the Fed said end it will end its bond-buying program after October and discussed plans for how to eventually raise interest rates.

There was disagreement over the Fed's promise to keep interest rates at zero for a "considerable time," with several voting members expressing concerns that the phrase will give markets an inaccurate outlook for when the central bank will tighten.

"The concern was raised that the reference to 'considerable time' in the current forward guidance could be misunderstood as a commitment rather than as data dependent," the minutes said.

"It was emphasized that the current forward guidance for the federal funds rate was data dependent and did not indicate that the first increase in the target range for the federal funds rate would occur mechanically after some fixed calendar interval following the completion of the current asset purchase program," the statement added.

However, others were reluctant to change the "considerable time" phrase for fear that markets would read a change in guidance as a hawkish shift in policy.

Most want the Fed to keep its ultra-accommodative monetary policy in place for now amid mixed signals from the labor and housing markets.

"In their view, the costs of downside shocks to the economy would be larger than those of upside shocks," the minutes read.

The Fed staff slashed its economic growth outlook due to a surging U.S. dollar, and worried that the stronger currency would hurt the Fed's efforts to get annual inflation back to its 2 percent target.

Some members worried that inflation will run below that target for a few years.

The Fed will meet again on October 28-29.