What the Fed manages to avoid is any reference to the global financial market turmoil witnessed earlier in October. Instead, they noted that, on balance, there had been “a substantial improvement in the outlook for the labor market
A number of participants said growth “might be slower than they expected if foreign economic growth came in weaker than anticipated,” according to minutes of the Sept. 16-17 Federal Open Market Committee meeting released today in Washington.
Our prompt assertion in June that the forward view within the SEP was more important than media headlines pointing to an imminent policy tightening were lost even more recently when the San Francisco Fed posted its paper on public expectations of policy.
The credibility of the Federal Reserve appears to be waning as the market refuses to take their threats of pulling away the liquidity punchbowl seriously. On what was, by any objective measure, a spectacularly bad non-farms payroll number on Friday, the S&P 500 futures rallied
Though the vote in favor of last month’s policy statement was a relatively tame 9-1 decision, with hardcore hawk Charles Plosser as the only dissenter, the recently released minutes showed more discord within the committee than the statement let on.
In the second paragraph there is also a subtle shift, with “labor market indicators (and inflation) moving towards levels the Committee judges consistent with its dual mandate”. Previously the Committee had said “labor market conditions would continue to improve gradually”.
The Committee will add to its holdings of agency mortgage-backed securities at a pace of $10 billion per month rather than $15 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $15 billion per month rather than $20 billion per month