http://www.nytimes.com/2014/11/20/business/federal-reserve-releases-minutes-of-october-2014-meeting.html 2014-11-19 20:45:14 Fed Sees Limited Impact From Overseas Weakness and Market Turmoil Minutes of the October meeting of Federal Reserve policy makers underscore the stability of the group’s economic outlook and approach. === WASHINGTON — The weakness of other major economies and recent turbulence in financial markets will not significantly impede domestic economic growth, The Fed made no mention of those speed bumps in a statement issued after the two-day meeting because officials regarded the likely effects as “quite limited,” according to an The account underscored the stability of the Fed’s economic outlook and its approach to monetary policy during a period of slow-but-steady domestic growth. And it suggested that officials were in no hurry to risk that stability by raising short-term interest rates, which have rested near zero since December 2008. The Fed ended the expansion of its bond holdings at the October meeting, completing a plan announced well in advance because officials concluded the economy did not need quite as much stimulus. The Fed’s postmeeting statement, however, said it still planned to hold rates near zero for a “considerable time.” Fed officials have described the statement as indicating that the central bank is most likely to begin raising short-term rates in mid-2015. The account of the October meeting, released after a standard three-week delay, said a couple of officials wanted the Fed to signal that rates might rise sooner, and a couple wanted the Fed to signal that rates might rise later. But the intentions of a majority have not appeared to shift in recent months. The sluggish pace of inflation is displacing unemployment as the primary reason the Fed is not ready to start raising interest rates. The unemployment rate, which fell to 5.8 percent in October, is getting close to the level Fed officials regard as normal. If inflation were rising at the Fed’s preferred pace of 2 percent a year, it is unlikely that they would wait much longer before starting to raise interest rates. Recent declines in energy prices are holding down inflation in the near term. The account said most Fed officials continued to predict that inflation will gradually return to the 2 percent annual pace — the Fed prefers to focus on measures of inflation that exclude energy prices precisely because of such short-term volatility. But doubts are growing. An economist at the Federal Reserve Bank of San Francisco said in Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, cited the slow pace of inflation in dissenting from the decision to end the Fed’s bond-buying program. Mr. Kocherlakota has called for the Fed to keep interest rates low until it forecasts a return to 2 percent inflation with the next two years. And while the weakness of the global economy may be weighing on domestic inflation, Fed officials at the meeting generally played down foreign problems. “It was observed that if foreign economic or financial conditions deteriorated further, U.S. economic growth over the medium term might be slower than currently expected,” the account said. “However, many participants saw the effects of recent developments on the domestic economy as likely to be quite limited.” Officials also viewed those concerns about other economies as the primary reason for recent jitters in domestic financial markets. But they played down their importance, noting that financial conditions “remained highly accommodative,” meaning that borrowing costs had not increased in response. So long as the problems are restricted to Wall Street, the account suggested, the Fed is not likely to respond.