The April FOMC Minutes Are Out!

The last time the Fed met, in April, there was basically no change to anything. Now the minutes are out.

The full details are here.

Some details:

  • Majority favour raising rates before selling assets.
  • All favour having the Fed balance sheet be solely Treasuries.
  • QEIII is unlikely.
  • The Fed acknowledged that consumer spending has slowed a bit.

This paragraph is key:

In addition, nearly all participants indicated that the first step toward normalization should be ceasing to reinvest payments of principal on agency securities and, simultaneously or soon after, ceasing to reinvest principal payments on Treasury securities. Most participants viewed halting reinvestments as a way to begin to gradually reduce the size of the balance sheet. It was noted, however, that ending reinvestments would constitute a modest step toward policy tightening, implying that that decision should be made in the context of the economic outlook and the Committee’s policy objectives. In addition, changes in the statement language regarding forward policy guidance would need to accompany the normalization process.

Click here for the full statement >