The Fed's policy making committee voted 11-0 at the March meeting to continue the bond purchases and keep its short-term rate at near zero. The Fed last month also signaled it wouldn't raise rates until after 2023.
Fed officials “generally expected strong job gains to continue over coming months and into the medium term,” supported by low interest rates, the Biden administration’s $1.9 trillion emergency financial package, ongoing vaccinations, and reopening businesses, according to the minutes.
Last month, Fed officials sharply raised their forecasts, projecting that the U.S. economy would grow 6.5% this year, up from 4.2% three months earlier. They now see the unemployment rate falling to 4.5% by the end of this year, below its earlier projection of 5%.
“However,” the minutes said, “the economy was far from achieving (the Fed’s) broad-based and inclusive goal of maximum employment."
Paul Ashworth, chief U.S. economist at Capital Economics, said that such comments indicate the Fed will likely continue its asset purchases through the end of the year.
Policymakers also underscored the importance of the Fed's new policy framework, adopted late last summer, which calls for the Fed to make changes in policy "based primarily on observed outcomes, rather than forecasts," the minutes said.
That means the Fed's brighter outlook, by itself, doesn't necessarily change the timetable of when it will begin to pull back on its stimulus. That's a sharp break from the past, when the Fed often would raise rates on the anticipation of rapid growth, which it feared would push inflation higher.
Fed Governor Lael Brainard, in an interview Wednesday on CNBC after the minutes were released, said the economic outlook “has brightened considerably,” but “we're going to have to actually see that in the data.”
The meeting came before last week's March jobs report, which showed a surprisingly strong 916,000 positions were added that month, the most since August, and the unemployment rate fell to 6% from 6.2%.
Still, some Fed bank presidents have stuck to the same message in the minutes. They argue that the economy still needs to improve further before the central bank will pull back on its support for the economy.
“All told, even though the economy is recovering, we still have a long way to go before economic activity returns to its pre-pandemic vibrancy,” Charles Evans, president of the Federal Reserve Bank of Chicago, said Wednesday in prepared remarks.