By Harriet Torry
The Federal Reserve on Thursday released the transcripts of its policy meetings in 2011, a year when it held interest rates near zero, let one bond-buying program expire and created a new one in its continuing efforts to boost the modest U.S. economic recovery.
A team of Wall Street Journal reporters is parsing the records and will be filing new details of the internal debates to our live blog as we find them. While we dig through, here is a refresher on what was going on that year in the economy and inside the Fed.
In 2011, Ben Bernanke was the Fed chairman, and Janet Yellen was the vice chairwoman. The U.S. economy was growing moderately but was rocked by the federal debt ceiling crisis at home and a sovereign debt crisis in the eurozone.
The Fed kept its benchmark federal-funds rate in a range between zero and 0.25% through the year. Officials felt good enough about the economy to let their $600 billion bond-buying program known as QE2 expire in mid-2011. But by late summer, they were contemplating new stimulus actions, and in the fall launched a debt swap called "Operation Twist" aimed at lowering long-term interest rates.
The partisan divide in the U.S. Congress took the country to the brink of default on its debt payments in early August, a move that was followed by the first-ever downgrade of the U.S.'s credit rating, by Standard & Poor's, to AA-plus from AAA.
Meantime, European leaders scrambled as Greece teetered on the brink of default, and the contagion spread elsewhere in the eurozone. The European Central Bank raised interest rates twice, in April and July, on jitters that commodity prices and a potential oil shock could stoke inflation, only to reverse course in November as the currency area slipped into recession.
We already know the basics of what the Fed did in 2011 because it announces its actions at each meeting of the rate-setting Federal Open Market Committee a few hours after it ends, and releases minutes summarizing the discussions three weeks later. But the minutes don't identify by name the remarks of the individual participants. The transcripts reveal the verbatim comments of the Fed's top policy makers and staff members at the meetings. Here is a timeline of their meetings and other Fed-related events in 2011:
Jan. 25-26: The FOMC meets in Washington, reaffirms its $600 billion bond-buying program -- known as QE2, or its second round of quantitative easing -- will continue through the second quarter.
Feb. 10: Kevin Warsh announces hewill resign from the board of governors.
March 1: John Williams is named president of the San Francisco Fed, succeeding Janet Yellen, who resigned Oct. 4, 2010, when she was sworn in as vice chairwoman of the board of governors
March 15: The FOMC meets in Washington, says the economic recovery is on a firmer footing.
March 18: The Fed intervenes in the currency market as part of a coordinated effort by Group of Seven nations to weaken the Japanese yen following a devastating earthquake and tsunami.
March 24: Fed Chairman Ben Bernanke announces he will hold regular press conferences four times a year for the first time in the central bank's history.
April 7: The European Central Bank raises interest rates due to concerns about rising inflation.
April 26-27: The FOMC meets in Washington, says the recovery is proceeding at a moderate pace and the labor market is improving gradually. After the meeting, Mr. Bernanke holds his first press conference as Fed chairman.
June 21-22: The FOMC meets in Washington as QE2 expires. In a statement, officials downgrade their assessment of the economy's performance, but give no indication they intend to take new steps to boost growth and jobs.
July 31: President Barack Obama and congressional leaders reach a deal to resolve the federal debt crisis.
Aug. 1: The FOMC holds an unscheduled conference call to discuss "contingencies in the event that the Treasury was unable to meet its obligations because the statutory federal debt limit was not raised or in the event of a downgrade of the U.S. sovereign credit rating."
Aug. 5: Ratings firm Standard & Poor's downgrades the U.S.'s AAA rating for the first time, saying the budget deal didn't do enough to address the gloomy outlook for U.S. government finances.
Aug. 9: The FOMC meets in Washington and describes economic growth so far in 2011 as "considerably slower" than expected while noting a deteriorating jobs market. Three officials dissent against the decision to hold interest rates at ultralow levels "at least" through mid-2013.
Aug. 26: Mr. Bernanke, speaking at the Kansas City Fed's annual retreat in Jackson Hole, Wyo., leaves the door open to more action to boost the sagging U.S. economy.
Sept. 20-21: The FOMC meets in Washington, announces that it would shift $400 billion of its short-term holdings into longer-dated debt, in a debt swap dubbed "Operation Twist," in an effort to reduce long-term interest rates.
Oct. 27: Eurozone leaders agree private investors in Greek government debt will take a 50% write-down on the value of their holdings as part of a package of measures designed to stem the eurozone debt crisis.
Nov. 1-2: The FOMC meets in Washington, says economic growth strengthened somewhat in the third quarter but unemployment remains elevated.Nov. 3: The European Central Bank, under new President Mario Draghi, surprises with a rate cut.
Nov. 22: The Fed released new rules asking large banks to submit to stress tests and detail their capital plans.
Nov. 28: The FOMC holds an unscheduled conference call to discuss changes to the Fed's existing swap arrangements with foreign central banks "in light of strains in global financial markets."
Nov. 30: The Fed, the ECB, the Bank of England, the Bank of Japan, the Bank of Canada and the Swiss National Bank simultaneously announce action to prevent Europe's debt crisis from triggering a global liquidity crunch.
Dec. 8: The ECB lowered its key interest rate by a quarter percentage point to 1%.
Dec. 13: The FOMC meets in Washington, says the economy has been expanding moderately despite slowing global growth.
Dec. 27: Mr. Obama nominates to the Fed board of governors Jerome Powell, a Republican and formerprivate-equity executive, and economist Jeremy Stein, a Democrat.
Write to Harriet Torry at email@example.com
(END) Dow Jones Newswires
January 12, 2017 10:20 ET (15:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.