9 Oct 2013
FOMC Minutes: Most members still expect taper this year
FXstreet.com (Córdoba) - Most members of the Federal Open Market Committee still thought that it would be appropriate to taper the Fed bond-buying program this year, even though they refrain from doing so last month, according to the minutes of the meeting released Wednesday.
According to minutes of the meeting held Sep 17-18 a couple of Fed officials thought that the first taper move would not come until next year and one thought the program would continue past June 2014. In contrast, a couple wanted to end the stimulus more quickly.
Officials who favored keeping the pace of bond purchases unchanged expressed concern that announcing even a small cut would send long-term interest rates higher as investors interpreted the move as a signal the Fed was willing to end its accommodative policy sooner than expected.
In the end, all but one of the ten voting members of the policy committee supported the decision not to scale back the stimulus, but several members viewed their decisions as a "relatively close call", according to the minutes.
The decision not to pull back on the program at the September meeting surprised the markets. At the meeting, concerns were raised about the effectiveness of FOMC communications if the Committee did not take that step as financial markets were expecting. Those who argued in favor of scaling back stimulus program expressed concerns "that a delay could potentially undermine the credibility or predictability of monetary policy."
The minutes also suggested a divided view of economic data among the participants.
The Fed policy committee is scheduled to hold its next meeting Oct 29-30, but expectations of tapering later this month are slight because of the US government shutdown.
According to minutes of the meeting held Sep 17-18 a couple of Fed officials thought that the first taper move would not come until next year and one thought the program would continue past June 2014. In contrast, a couple wanted to end the stimulus more quickly.
Officials who favored keeping the pace of bond purchases unchanged expressed concern that announcing even a small cut would send long-term interest rates higher as investors interpreted the move as a signal the Fed was willing to end its accommodative policy sooner than expected.
In the end, all but one of the ten voting members of the policy committee supported the decision not to scale back the stimulus, but several members viewed their decisions as a "relatively close call", according to the minutes.
The decision not to pull back on the program at the September meeting surprised the markets. At the meeting, concerns were raised about the effectiveness of FOMC communications if the Committee did not take that step as financial markets were expecting. Those who argued in favor of scaling back stimulus program expressed concerns "that a delay could potentially undermine the credibility or predictability of monetary policy."
The minutes also suggested a divided view of economic data among the participants.
The Fed policy committee is scheduled to hold its next meeting Oct 29-30, but expectations of tapering later this month are slight because of the US government shutdown.