October 2015 FOMC Minutes.pdf

A joint meeting of the Federal Open Market Committee and the Board of Governors was held on October 27-28, 2015. The meeting was attended by various officials, including Janet L. Yellen, Chair, and other members of the Federal Open Market Committee. The staff presented briefings on the concept of an equilibrium real interest rate, which can serve as a benchmark to gauge the stance of monetary policy. Estimates indicated that the short-run equilibrium real rate fell sharply during the 2008-09 financial crisis and recession, and has only partially recovered, remaining close to zero. The staff noted that longer-run trends in real interest rates have been declining in the US and other large economies over the past quarter-century, and are likely to remain low due to slow growth in total factor productivity and demographic projections. Policymakers discussed the implications of uncertainty about the level of the equilibrium real rate for monetary policy deliberations, noting that the unemployment rate has declined gradually in recent years, suggesting that real GDP growth has exceeded growth of potential GDP, but not by a substantial margin.