made to put downward pressure on interest
rates to boost a tepid recovery after the 2008
financial crisis.
Bernanke’s statement caught markets by
surprise and caused an immediate jump in
bond yields. Fed officials had to scurry to assure
investors that no immediate reduction in the
bond purchases was planned. The incident came
to be called the “taper tantrum.”
The minutes of the Fed’s December discussion,
released Wednesday after the customary
three-week delay, did not spell out what would
constitute “substantial further progress” in
meeting the central bank’s economic goals.
The minutes did say that officials believed any
changes in bond purchases would not be based
on “specific numerical criteria or thresholds.”
The Fed next meets on Jan. 26-27 and analysts
believe it will leave its benchmark rate at the
ultra-low level where it has been since last
March with bond purchases continuing at the
same pace they are being made now.
Analysts said the minutes of the December
meeting re-enforced that view. Pash Ashworth,
chief economist at Capital Economics, said the
December meeting revealed that “Fed officials
were in no rush to change either the monthly
pace or the composition” of the bond purchases.
Various Fed officials have warned that the
winter months could see a slowdown in activity
because of the surge in coronavirus cases
with more government assistance likely to
be needed. Congress last month did approve
a $900 billion relief package and President-
elect Joe Biden has said he will push for more
assistance after he takes office on Jan. 20.