Federal Reserve officials expressed concern about their scope to battle the next recession in their latest meeting, even as the US’s strong immediate prospects kept them on track towards higher interest rates, with a likely move looming next month.
Minutes of the meeting held on July 31 and August 1 showed on Wednesday that while US policymakers are broadly positive about the country’s current economic prognosis, they have held lengthy discussions about how effective their tools would be if a major recession were to strike.
Fed staff found that there was a meaningful risk that the central bank will be forced to cut rates to near-zero levels within the next decade, and their analysis suggested unconventional tools such as asset purchases would likely have limited effects in battling the initial downturn, the minutes recorded.