Questions about the US economy raised in the FOMC minutes to the September meeting (our paraphrasing):
– Is the drop in the demographics-adjusted labour force participation rate the result of structural or cyclical factors? Read more
Highlights follow, beginning with inflation:
Both headline and core PCE inflation in the first quarter came in below the Committee’s longer-run goal of 2 percent, but these recent lower readings appeared to be due, in part, to temporary factors; other measures of inflation as well as inflation expectations had remained more stable. Accordingly, participants generally continued to expect that inflation would move closer to the 2 percent objective over the medium run. Nonetheless, a number of participants expressed concern that inflation was below the Committee’s target and stressed that future price developments bore careful watching. Read more
Here’s the passage from the January FOMC minutes that is getting the most attention (emphasis ours, and we separated it into multiple pars for an easier read):
Several participants emphasized that the Committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved. For example, one participant argued that purchases should vary incrementally from meeting to meeting in response to incoming information about the economy. Read more
These minutes are for the meeting at which the Fed announced its switch to a version of the Evans’ Rule. While that change was expected, it wasn’t expected to be made as soon as it ultimately was.
The most interesting bit from the minutes below in bold, followed by some quick commentary. Read more
– We’ve heard a lot lately on the idea of an “open-ended” asset purchase program. Well, it seems the committee also discussed the possibility of a kind of open-ended language guidance. That’s in addition to discussing the idea of extending the date from late-2014 into 2015 or scrapping the guidance altogether and tying the start of eventual tightening to economic factors:
Participants discussed a number of policy tools that the Committee might employ if it decided to provide addi-tional monetary accommodation to support a stronger economic recovery in a context of price stability. One of the policy options discussed was an extension of the period over which the Committee expected to maintain its target range for the federal funds rate at 0 to ¼ percent. It was noted that such an extension might be particularly effective if done in conjunction with a statement indicating that a highly accommodative stance of monetary policy was likely to be maintained even as the recovery progressed. Given the uncertainty attending the economic outlook, a few participants questioned whether the conditionality of the forward guidance was sufficiently clear, and they suggested that the Committee should consider replacing the calendar date with guidance that was linked more directly to the economic factors that the Committee would consider in deciding to raise its target for the federal funds rate, or omit the forward guidance language entirely. Read more
Everyone was curious to whether the minutes would reveal just how close FOMC members were to doing something more aggressive than extending Operation Twist at its last meeting — and if they were close, then what they were waiting for.
– “More aggressive” policy could take the shape of QE3, of course, but also could include extending the “late 2014″ language to 2015. Read more
Yes, of course, there was a lot of stuff in the minutes about recent trends in the economy and the looming fiscal cliff and inflation forecasts and so on. The word “uncertainty” was used an awful lot with respect to the various forecasts in the SEP.
Nothing was decided in the March 13 FOMC statement, though it did include the Fed’s cautious recognition that the prospects for the US economy had improved since the start of the year.
But the minutes from the meeting, set to be released on Tuesday at 2pm EST, are likely to scrutinised carefully for any discussion of what the Fed might do next. Read more
The media never pays much attention to the discussion in the FOMC minutes that presents the views of Fed staff economists; we all flock to the parts that describe the thinking of the FOMC participants themselves.
Which is perfectly sensible — we’re looking for insights into what is steering monetary policy and scrutinising the thoughts of the people who, um, steer monetary policy. Read more
A few items to note as we come across them:
1) Recall that at the end of the meeting, the Fed released a new “Statement of Longer-Run Goals and Monetary Policy Strategy”, making explicit its 2 per cent inflation target. The minutes revealed that the statement will be reaffirmed once a year and ”the bar for amending the statement would be high.” Daniel Tarullo, a Fed governor, was the only member who abstained from the statement Read more
The FOMC minutes will be released in just a few minutes (2pm EST).
There will be a lot of parsing given the importance of the last meeting (first time publishing projections for the fed funds rates, extending the low rates language to late-2014, etc). The minutes will probably have the same dove-ish and recent-improvement-undermine-y tone that was embedded in the statement. But given the number of members that believed it appropriate to start tightening before late-2014, there’s a chance we’ll at least glimpse some signs of disagreement. Read more
UPDATE: Having chewed on these for a little while, it seems the momentum on the committee is towards doing something more accomodative at the next meeting in September.
More than we had realised, anyway. We were completely unsure about this after Jackson Hole, and we don’t really know anything now. The minutes don’t tell us, for instance, which steps the more dove-ish members would prefer in which order, or what they think are the dangers associated with each. Read more
The minutes from the US Federal Reserve’s June meeting show there is some interest in monetary stimulus if economic growth remains weak, marking the Fed’s first serious discussion of easing since the US economy hit a “soft patch” in the spring. “Some participants noted that, if economic growth remained too slow to make satisfactory progress toward reducing the unemployment rate, and if inflation returned to relatively low levels after the effects of recent transitory shocks dissipated, it would be appropriate to provide additional monetary policy accommodation,” the minutes said. Further monetary action would be likely to mean more quantitative easing, aimed at driving down long-term interest rates. However the minutes also show a deep divide among the FOMC members. While some thought that weak growth might create a need for further easing, others thought that slower growth and higher inflation suggest “that there might be less slack in jobs and product markets than had been thought”.
Given the attention that inflation expectations received in Tuesday’s release of the latest FOMC minutes, we’re not the least bit surprised that it’s been the topic du jour among analysts (along with other distractions).
We’ll get to them in a moment, but first, here is the key paragraph from the minutes: Read more
The FOMC on Tuesday released the minutes of its March 15 meeting, and we excerpt a few things below.
Our earlier post on the March 15 statement summarised the language changes from the FOMC’s statement in February. The biggest were an acknowledgment of upward inflationary pressure driven by commodities and a line noting that the recovery was now on a firmer footing. Read more
The minutes from the FOMC’s meeting on December 14 are out.
At first glance there appear to be no hidden nuggets of insight, and the discussion of where the economy stood near the end 2010 makes for familiar reading: generally improving indicators tempered by ongoing worries about the housing market, deleveraging by households, and the unwillingness of corporate employers to use their cash piles to hire new workers. Read more
The FOMC has released the minutes of its meeting from November 2-3, including revisions to the committee’s forecasts for growth, unemployment, and inflation in the next three years.
We’ll have analysis later, but we wanted to get the link and an excerpt to you as quickly as possible. But first the new projections (click to enlarge): Read more
The Federal Open Market Committee has released the minutes from its meeting on September 21.
That was the meeting in which the Fed changed its language on inflation levels, writing that they were “below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability”. Since then markets have been anticipating a big new round of asset purchases to be announced at the next meeting in early November. Read more
Global shares, which spent most of the day in negative territory, fell further after the Federal Reserve raised concerns that it may have ruled out large-scale asset purchases, the FT reports. Throughout much of Tuesday’s session there has been an overriding sense that fiscal and monetary authorities are bumbling their lines in the face of a dangerous plot twist for the global economy, pushing traders away from stocks and back into havens such as core government bonds. The yields on benchmark 10-year Treasuries fell slightly further after the minutes were released, down 6 basis points to 2.47 per cent.
You already knew this if you read the Wall Street Journal’s impressively detailed article last week, but the just-released minutes of the FOMC’s meeting on August 10 seem to reinforce the notion that there is significant disagreement within the Fed behind closed doors.
Or maybe we’re just reading too much into it. Read more