FOMC Update: Well I Guess the Fed IS That Stupid After All...
Last night, I guessed that the FOMC wouldn't have the guts to do much of anything this time around simply because there is not an agreement on just how bad things are out there. Apparently I was wrong:
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature.
My guess is that a lone voice shot down a brand new round of Treasury buying with freshly-printed money (sorry, freshly-printed blips) just for kicks and that this was the best they could agree on without starting a shootout at the conference table.
Voting against the policy was Thomas M. Hoenig, who judges that the economy is recovering modestly, as projected. Accordingly, he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and limits the Committee's ability to adjust policy when needed. In addition, given economic and financial conditions, Mr. Hoenig did not believe that keeping constant the size of the Federal Reserve's holdings of longer-term securities at their current level was required to support a return to the Committee's policy objectives.
Hahahaha I'm all for dissent as you all know but not sure where this modest recovery is hiding out, must be cowering under the FOMC table where only they can see it.
Anyway, that's that.