WASHINGTON - Federal Reserve policymakers were split at their April meeting over whether the economy's winter weakness was temporary or might last longer. But they largely agreed that June would be too early to start raising interest rates.
While "a few" Fed officials believed that the U.S. economy would be ready to raise rates in June, they were outnumbered by "many" Fed officials who viewed it as "unlikely" that the economic data would be strong enough to justify a hike next month.
The opposing views were revealed in the minutes of the central bank's discussions at their April 28-29 meeting which were released Wednesday. The Fed has kept its key rate near zero since December 2008.
The Fed next meets on June 16-17. Many economists at the beginning of the year believed June was the most likely date for the first rate hike. But now many private analysts have pushed that liftoff date back to September or even later given unexpected weakness at the start of this year.
The overall economy, as measured by the gross domestic product, grew at a meager rate of just 0.2 percent in the January-March quarter. The figure could well be revised by the government next week to show that the economy actually contracted during the period.
In its policy statement issued after the June meeting, the Fed said that the growth slowdown experienced during the winter reflected in part "transitory factors." But the minutes of the discussion show that officials debated just how temporary the slowdown might be.
"Various reasons were also advanced for believing that some of the recent weakness in the pace of economic activity might persist," the minutes said. It cited a "number of participants" who felt that exports might remain depressed because of the stronger dollar and that business investment might continue to be hurt by the big drop in oil prices.
Some officials noted that consumer spending has yet to feel the expected boost from lower energy prices, while others said the downside risks to growth had risen since the Fed's March meeting.
But policymakers also said that the end of harsh winter weather and the resolution of a labor dispute at West Coast supported their view that the slowdown would be transitory.
The minutes showed that officials discussed whether they should send an "explicit indication" that a rate hike was imminent in some type of communication between meetings. But this idea was opposed by other Fed officials who felt that the central bank should continue to assess the timing of the first rate hike on a meeting-by-meeting basis.