The Federal Reserve debated changing its plans for raising interest rates so it could keep its easy-money policy in place longer, according to documents released Wednesday.
The minutes of the Fed's policy-setting meeting in July show that officials discussed at length for the first time whether they should alter the terms of their landmark promise to keep short-term rates near zero until inflation reaches 2.5 percent or the unemployment rate hits 6.5 percent. The ideas broached included lowering the target for unemployment and establishing a floor for inflation. The Fed also considered providing more detail about what it would do once its existing thresholds are met.
Although the central bank ultimately decided not to make any policy changes during the July meeting, the discussion underscores the challenge facing the Fed as it grapples with the best way to wind down its unprecedented stimulus of the American economy. As the recovery strengthens, the Fed must find a way to withdraw its support without frightening the markets or the public, which could undo its careful work.