FOMC Minutes: Fisher Vote Against Action

Mr. Fisher dissented because he preferred to leave the federal funds rate unchanged. The rate had been lowered by 75 basis points just one week earlier in a decision he supported, which brought the funds rate down 175 basis points since September. Given these actions, he felt that monetary policy was already quite stimulative, while headline inflation was too high at more than 3 percent over the last year. Demand-pull inflation pressures from emerging-market economies abroad appeared to be continuing, and anecdotal reports from business contacts suggested greater willingness domestically to pass rising costs through to prices. Moreover, Mr. Fisher was concerned that inflation expectations could become unanchored if the perception of negative real rates of interest were to become pervasive. At the same time, the economy appeared to be still growing, albeit at a substantially weakened pace. Given the policy tradeoffs confronting the FOMC at this time, Mr. Fisher saw the upside risks to inflation as being greater than the downside risks to longer-term economic growth, especially in light of the recent, aggressive easing of monetary policy and the lag before it would have its full effect on the economy.