Pool/Getty Images
- Fed policymakers gave their first indication the central bank had tapering in mind, minutes showed.
- If the recovery stays strong, "it might be appropriate" to start considering a tapering plan, some officials said.
- Participants added it will be "some time" before enough progress is made to warrant a pullback.
- See more stories on Insider's business page.
Federal Reserve Chair Jerome Powell quipped in June that the central bank wasn't even "thinking about thinking about" pulling back on its economic support.
Roughly 10 months later – and 14 months after the Fed introduced its emergency aid – policymakers are thinking about it.
The Fed has held its benchmark interest rate near zero and bought at least $120 billion in assets each month to support economic activity through the pandemic. The Federal Open Market Committee's April meeting concluded with members keeping rates and the pace of asset purchases the same, but minutes published Wednesday signal a change-up is being considered.
"A number of participants suggested that if the economy continued to make rapid progress toward the Committee's goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases," minutes showed.
The statement is the first indication that officials are starting to consider when they'll eventually normalize monetary policy and retract pandemic-era aid. Still, participants noted it will be "some time" until the recovery progresses enough to warrant such tapering.
As vaccine distribution continues and the economy reopens further, economists and investors have kept their eyes peeled for any hint at when the Fed will pull back on its purchases. Economic projections released in March pegged the first post-pandemic rate hike arriving sometime after 2023, but the Fed has been less explicit as to when it will taper asset purchases.
Guidance from the Fed on such matters has massive implications for markets. When investors learned the central bank was slowing its rate of asset purchases in 2013, a collective panic rippled through markets and drove Treasury yields sharply higher.
Powell has made it clear that he hopes to avoid such an outcome as the US recovers. The chair said in March that the Fed would supply "clear communication well in advance" of any tapering or plans to taper.
His message was echoed in the April FOMC minutes. Participants "highlighted the importance of the Committee clearly communicating its assessment of progress toward its longer-run goals," as well as when it would change its current policy stance, according to the release.
And although the recovery has continued at a healthy pace, data released since the April meeting suggest such communication is a ways away. The April jobs report, published May 7, massively disappointed, with the US adding only 266,000 payrolls through the month. The reading fell well below the median estimate of 1 million jobs and marked a sharp deceleration from the growth seen in March.
Unless job creation rebounds before the next FOMC meeting in June, policymakers are likely to stay their ground and hold off on giving any clues at when tapering will begin.