There were two factors that came into play: That the change wouldn’t mean much because the Fed still remained well below its longer-run rate target, and that it wouldn’t make sense to wait until the funds rate had been raised even more.
That, committee members agreed, would suggest “a false sense of precision” of where the rate might be.
Many Fed watchers took the move to mean that the committee was getting closer to the end of its rate hikes, but that interpretation soon proved off the mark. The minutes said including “accommodative” was not “providing meaningful information in light of uncertainty surrounding the level of the neutral policy rate.”
The move is in keeping with recent remarks from several Fed officials, who appear to be veering away from targeting a longer-run “neutral” rate that is neither restrictive nor accommodative and instead letting economic data and financial conditions be the guide.
Indeed, the minutes note that future policy moves would “depend on the evaluation of incoming information and its implications for the economic outlook.
“In this context, estimates of the level of the neutral federal funds rate would be only one among many factors that the Committee would consider in making its policy decisions.”
Some members even suggested the Fed should hold periodic reviews for how it is formulating policy.