U.S. central bankers backed off in July from an earlier readiness to set a clearer bar for raising interest rates, a step that would underscore their commitment to an extended period of ultra-loose monetary policy.

“With regard to the outlook for monetary policy beyond this meeting, a number of participants noted that providing greater clarity regarding the likely path of the target range for the federal funds rate would be appropriate at some point,” according to minutes of the Federal Open Market Committee’s July 28-29 meeting released on Wednesday.

That was a subtle change from the previous set of minutes indicating policy makers were keen to sharpen their so-called forward guidance “at upcoming meetings.” Last month’s debate included a discussion about committing to holding rates near zero until specific thresholds for inflation, or unemployment, or both, had been reached.

The FOMC next gathers on Sept. 15-16.

Since the last meeting a number of Fed officials have indicated there is less need to offer new guidance so long as the coronavirus pandemic is significantly holding the economy back.

‘Weigh Heavily’

“Members agreed that the ongoing public health crisis would weigh heavily on economic activity, employment and inflation in the near term and was posing considerable risks to the economic outlook over the medium term,” the minutes said.

The Fed’s view of a less robust recovery helped weigh on stocks. The dollar extended its gains.

“The data is still very volatile,” said Marvin Loh, senior global macro strategist at State Street, commenting on the committee’s hesitance to provide new guidance. “They want to have a clearer picture on what the economy’s cadence is going to look like before they commit to something.”

Federal Reserve officials left interest rates unchanged near zero at their July session and continued to buy Treasury and mortgage-backed bonds at a pace of about $120 billion a month.

Outlook Uncertain

At a press conference following the meeting, Fed Chair Jerome Powell said the path forward for the economy was “extraordinarily uncertain” and would depend on containing the virus. Results on that front have been mixed, with infections rising in several U.S. states, potentially weakening the recovery.

Officials had a long list of worries about the outlook, ranging from new waves of virus outbreak disrupting growth and crimping credit conditions, to waning fiscal support, as well as disruptions to foreign growth from the pandemic. Importantly, “several” said the long-run impact of the pandemic could result in business restructurings that may “slow the growth of the economy’s productive capacity for some time.”

“Uncertainty is quite high. And I think uncertainty matters a lot for players in the economy and consequently for the economy itself,” said Thomas Barkin, president of the Federal Reserve Bank of Richmond, speaking later on Wednesday. “The Fed is doing a lot to support the economy right now and we’re committed to continuing that support.”

Even as they ratcheted down the urgency of altering their guidance in the near term, policy makers at the July FOMC meeting continued to discuss the conditions that would merit eventual changes to monetary policy.

Options included waiting for inflation or unemployment to reach desired levels, before raising rates, as well as sharpening the language around asset purchases in terms of “fostering accommodative financial conditions and supporting economic recovery.”

Strategy Review

While they have backed off the timing on forward guidance, they are going ahead with a new statement of long-term goals and strategy, a step that would mark the conclusion of their first-ever review of strategy, policy tools and communication that occupied the Fed for much of the last year and a half.

Officials said, “It would be important to finalize all changes to the statement in the near future.” Such a move “would help guide the committee’s future policy actions and communications,” the minutes said, suggesting the framework review may wrap up before any substantive changes to the committee’s forward guidance on policy.

Prompted by worryingly low inflation and interest rates that eroded the central bank’s ability to fight recessions, the Fed spent all of 2019 and much of this year conducting its first comprehensive framework review.

The review is widely expected to result in the Fed embracing a more relaxed approach to inflation, one that would allow inflation to sometimes exceed the 2% target in order to achieve average outcomes closer to that objective.

Yield Curve Control

Officials again sounded unenthusiastic about capping Treasury yields -- a strategy known as yield-curve control -- an impression that hurt Treasuries and lifted yields to session-highs.

“Of those participants who discussed this option, most judged that yield caps and targets would likely provide only modest benefits in the current environment, as the Committee’s forward guidance regarding the path of the federal funds rate already appeared highly credible and longer-term interest rates were already low,” the meeting’s record said.