WASHINGTON - The Federal Open Market Committee voted 11-to-1 to maintain its bias toward raising short-term interest rates at its July meeting, yet some members said a tightening move in the near term was unlikely, according to minutes of the meeting released Friday.
"A majority of the members, taking account of the current stance of monetary policy, favored a proposal to retain the bias toward possible tightening that the committee had adopted at the May meeting," the minutes say.
"In this connection, some commented that while the need for any policy adjustment during the period ahead seemed somewhat remote, the next policy move was more likely to be in the direction of some firming than toward easing," the minutes say.
Fed Governor Wayne Angell voted against the policy stance and called for an immediate tightening move, the minutes say.
"In his view, monetary policy was overly expansive at this point as evidenced by what he viewed as excessive liquidity in financial markets, the negative level of real short-term interest rates, and the disappointing lack of progress toward lower inflation this year," the minutes say.
The minutes seemed to indicate that some members of the committee viewed a neutral policy as more appropriate to current conditions, but they did not want to change their policy so quickly after the May meeting.
"Other members suggested that a symmetrical directive might be more consistent with current economic conditions," the minutes say.
But the minutes say. "These members agreed, however, that a return to symmetry so soon after the adoption of a directive that was biased toward restraint could convey a misleading impression that recent developments had increased the committee's concerns about the sustainability of the expansion or that the committee had become less committed to a disinflationary policy course."
The committee has since met on August 17. Fed watchers seem to be divided over whether the committee kept the tightening bias or reverted back to a neutral stance.