Policymakers of the Federal Open Market Committee, looking to maximize employment and stabilize the economy, debated whether to raise interest rates in June or September, or even wait until June 2016, the report stated.
While some policymakers argued that raising interest rates at the end of the fiscal year would help normalize the economy as inflation creeps back to 2 percent, others argued that declines in energy prices and the growing strength of the dollar would curtail inflation and that a later rate hike would make more sense. Still others argued that the economy will not be in the proper condition for raised interest rates for another year. The minutes don’t identify who argued which approach to the rate hike.
Overall, however, the argument was not a matter of if the interest rate should increase, just when. Whenever it comes, it will be the first rate hike since 2006.
Ultimately the FOMC agreed to strike the word “patient” from minutes of previous meetings, as it pertains to the rate hike. All but one (unidentified) official voted to strike the word.
The committee wrote that patience in normalizing policy “should not be viewed as indicating that the federal funds rate would necessarily be increased within a couple of meetings.” They also agreed that "an increase in the target range for the federal funds rate remained unlikely at the April FOMC meeting,” the minutes stated.
While striking the word “patient,” officials left themselves enough leeway in the language to begin raising the rate in June, should it be warranted then. “With continued improvement in economic conditions, [committee members] preferred language that would provide the Committee with the flexibility to subsequently adjust the target range for the federal funds rate on a meeting-by-meeting basis," according to the minutes.
Members did reference the 2 percent economic slowdown in Q1, but attributed it to severe winter weather and not to declining economic conditions.