Fed Minutes Start to Show Cracks in the FOMC, Point to Potential Asset Purchases
Don't read that headline wrong, there is crack in the FOMC as well but that's a separate issue which WC Varones was kind enough to address earlier today.
I could guess which Federal Reserve official diverged from the pack and told these guys to shove it, they're out of their damn minds but I think we ALL know who that was.
I find it interesting that they all agreed sending clear signals was a bright idea considering the Fed's penchant for obscurity but "marketing" and "monetary policy" don't necessarily skip hand-in-hand down the street making smoochy faces at each other, the Fed's going to have to do better than sending clear signals if it thinks markets are going to buy their lines.
Action, boys, action. You can purr in our ears all you want but it comes down to execution and I still believe there is no "exit strategy". Seeing as how it's too late to pull out, I would hope they figure one out before too long. You know, just so we're not totally doomed.
Federal Reserve officials last month debated increasing and extending asset purchases should the economy weaken, with a few favoring the move and one seeking a reduction, minutes of their last meeting showed.
Policy makers also differed over whether risks are greater that inflation will speed up or slow down too much, the Fed’s Open Market Committee said today in minutes of its Dec. 15-16 meeting in Washington. Some officials said “quite elevated” slack in the economy would damp prices, while others saw a risk of faster inflation from the Fed’s “extraordinary” stimulus.
Short-term Treasuries rose after the report as traders reduced bets the Fed would raise rates by August. Fed Chairman Ben S. Bernanke and his colleagues are trying to withdraw unprecedented stimulus and emergency lending programs without impeding efforts to sustain a recovery and reduce unemployment, which is now close to a 26-year high.
“To keep inflation expectations anchored, all participants agreed that monetary policy would need to be responsive to any significant improvement or worsening in the economic outlook and that the Federal Reserve would need to continue to clearly communicate its ability and intent to begin withdrawing monetary policy accommodation at the appropriate time and place,” the minutes said.
Two-year Treasuries reversed losses, with the yield falling two basis points to 0.99 percent at 4:15 p.m. in New York. A basis point is 0.01 percentage point. The Standard & Poor’s 500 Index was little changed at 1,137.14.
It's like all the magnetic letters lined up right to make this ransom note work but it's still a flop.
Full text of the FOMC minutes for December can be found via the Board of Governors here.