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FOMC Highlights, Hoenig Dissention And Full Minutes

Tyler Durden's picture





 

Highlights:

14:00 02/17 FOMC UPS'10 GDP GRWTH FCAST TO 2.8%-3.5%;UPS UNEMP LWR LIMIT
14:00 02/17 FOMC MINS:REF TO'PURCHASES'WLD NEED CHNG AS PRGRMS NEAR END
14:00 02/17 FOMC:MANY SAW UPWD COMMDTY PR PRESSURE/GLOB RECOV AS INFL RISK

14:04 02/17 PLOSSER: MIGHT FAVOR SELLING ASSETS BEFORE HIKE INT RATES
14:05 02/17 PLOSSER:FAVOR USING FED FUNDS RATE TO IOER AS POLICY INSTRUMNT
14:00 02/17 FOMC MINS:LABR MKT WEAKNESS STILL 'IMPORTANT CONCERN' FOR FOMC
14:00 02/17 FOMC MINS: UPSIDE/DNSIDE RISKS TO ECON OUTLK 'ROUGHLY BALNCED'
14:00 02/17 FOMC MINS:MOST FIN MKTS NO LONGER SHOWED SIGNIFICANT IMPAIRMNT
14:00 02/17 FOMC MINS: S-TERM RATE PATH TO DEPEND ON ECON OUTLOOK EVOLUTN
14:00 02/17 FOMC:HOENIG:MODEST RATE HIKE SOON WLD STILL SUPPORT ECON RECOV
14:00 02/17 FOMC:HOENIG:RATE HIKE SOON WLD LWR RISK OF HIGH LT INFL EXPECT
14:00 02/17 FOMC:HOENIG:MODEST RATE HIKE SOON WLD LWR L-T IMBALANCES RISKS
14:00 02/17 FOMC:HOENIG:WORD CHG WLD GIVE FLEX TO BEGIN MODEST RATE HIKES
14:00 02/17 FOMC:HOENIG CONCERNED LOW RATES TOO LONG RISK UP INFL EXPECTNS
14:00 02/17 FOMC MINS:NO CHNG IN ASSET BUY PROGRMS WARRANTED AT JAN MTG
14:00 02/17 FOMC: OTHERS SAID ASSET BUYS WORDING CHANGE WLD BE 'PREMATURE'
14:00 02/17 FOMC:WORD CHANGE WLD REFLECT POSSIBILITY OF ASSET BUYS,SALES
14:00 02/17 FOMC: ONE SUGGESTED REPLACE EVALUATE 'PURCHASES' BY 'HOLDINGS'
14:00 02/17 FOMC UPS PCE INFL F-CASTS TO 1.4% TO 1.7% IN '10;1.1%-2.0% '11
14:07 02/17 PLOSSER:PAYING INT ON RES COSTLY, UNPOPULAR, NEED CUT RESERVES
14:07 02/17 PLOSSER: COLLAPSE OF EURO ZONE WOULD BE 'TERRIBLY TRAUMATIC'
14:07 02/17 PLOSSER: NEED TO ANNOUNCE SKED OF MBS SALES WHEN TIME COMES
14:07 02/17 PLOSSER: GREECE CRISIS EXPOSES WEAKNESSES OF EURO ZONE
14:07 02/17 PLOSSER:'EXTNDED PERIOD'CONFINES US;NEED TO GRAD'LLY EXTRICATE
14:05 02/17 PLOSSER: NEED TO GET RESERVES DOWN TO RAISE INTEREST RATES
14:05 02/17 PLOSSER: CAN IMAGINE TIGHTENING BEFORE Q4 OR AFTER Q4
14:05 02/17 PLOSSER: TIMING OF RATE HIKES TO DEPEND ON ECON CONDITIONS
14:05 02/17 PLOSSER: NEED TO FIND WAY TO GET OUT OF EXTENDED PERIOD LANG

Hoenig dissention critical:

Mr. Hoenig dissented because he believed it was no longer advisable to indicate that economic and financial conditions were likely to “warrant exceptionally low levels of the federal funds rate for an extended period.” In recent months, economic and financial conditions improved steadily, and Mr. Hoenig was concerned that, under these improving conditions, maintaining shortterm interest rates near zero for an extended period of time would lay the groundwork for future financial imbalances and risk an increase in inflation expectations. Accordingly, Mr. Hoenig believed that it would be more appropriate for the Committee to express an  expectation that the federal funds rate would be low for some time—rather than exceptionally low for an  extended period. Such a change in communication would provide the Committee flexibility to begin raising rates modestly. He further believed that moving to a modestly higher federal funds rate soon would lower the risks of longer-run imbalances and an increase in longrun inflation expectations, while continuing to provide needed support to the economic recovery.

On asset sales:

Participants expressed a range of views about asset sales. Most judged that a future program of gradual asset sales could be helpful in shrinking the size of the Federal Reserve’s balance sheet, reducing reserve balances, and shifting the composition of securities holdings back toward Treasury securities; however, many were concerned that such transactions could cause market disruptions and have adverse implications for the economic recovery, particularly if they were to begin before the recovery had become self-sustaining and before the Committee had determined that a tightening of financial conditions was appropriate and had begun to raise short-term interest rates. Several thought it important to begin a program of asset sales in the near future to ensure that the Federal Reserve’s balance sheet shrinks more quickly and in a more predictable manner than could be achieved solely by redeeming maturing securities and not reinvesting prepayments; they judged that a program of asset sales spread over a number of years would underscore the Committee’s determination to exit from the period of exceptionally accommodative monetary policy in a manner and at a pace that would keep inflation contained without having large effects on asset prices or market interest rates. A few suggested that the pace of asset sales, and potentially of purchases, could be adjusted over time in response to developments in the economy and the evolution of the economic outlook. The Committee made no decisions about asset sales at this meeting.

Full Minutes:

 

 


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Wed, 02/17/2010 - 15:15 | Link to Comment Oso
Oso's picture

these guys' heads are stuck so far up their arses they will not see the stampede of impoverished peasants coming for their heads.

 

meanwhile, yield curve making record steeps, as most crowded trade on earth increases its crowdiness factor exponentially.

Wed, 02/17/2010 - 15:22 | Link to Comment John McCloy
John McCloy's picture

14:05 02/17 PLOSSER: TIMING OF RATE HIKES TO DEPEND ON ECON CONDITIONS

See..lol. If there is a slow recovery rates need to stay low, If there is no recovery rates need to stay low longer. Under no circumstances aside from the creation of ludicrous bubbles do they raise interest rates. It is comedic. When will they understand that there are no jobs coming anytime soon to warrant either the current prices or induce borrowing. They believe that housing will float back to previous levels and then banks assets will be worth something along with the useless MBS they have been purchasing and all will unwind so delicately. How many straight months do we have low rates?

Solving the problem with another problem that was proven to have caused bigger problem multiple times works on what planet?

Wed, 02/17/2010 - 15:18 | Link to Comment DavidC
DavidC's picture

"I WILL hold 10,300...I MUST hold 10,300..."

"I WILL hold 1,100...I MUST hold 1,100..."

When this goes, it's REALLY going to go.

DavidC

Wed, 02/17/2010 - 15:19 | Link to Comment DavidC
DavidC's picture

14:00 02/17 FOMC MINS: UPSIDE/DNSIDE RISKS TO ECON OUTLK 'ROUGHLY BALNCED'

WHAT?!?!?!

DavidC

Wed, 02/17/2010 - 16:19 | Link to Comment faustian bargain
faustian bargain's picture

you know, 'rough' as in 'we're gonna rough you up.'

Wed, 02/17/2010 - 15:21 | Link to Comment Anonymous
Wed, 02/17/2010 - 16:26 | Link to Comment faustian bargain
faustian bargain's picture

The fed can create money at will...sortof doesn't matter where it comes from.

Wed, 02/17/2010 - 16:28 | Link to Comment Anonymous
Thu, 02/18/2010 - 09:38 | Link to Comment Rusty Shorts
Rusty Shorts's picture

It's quite simple really, a game if you will. The banksters, have somehow been given the power, to counterfeit (print/data entry) money, so this puts them in total control of the planet, as long as the sheep doesn't wake up to the fact, that the fucking banksters can create money from literally nothing, charge fucking interest on money that comes from nothing, and all the while, buying up real/hard assets with fake god-damned money.

 

 

Wed, 02/17/2010 - 17:03 | Link to Comment BaseLine
BaseLine's picture

bingo. the fed prints an arbitrary amount of the green stuff

Wed, 02/17/2010 - 17:19 | Link to Comment Anonymous
Wed, 02/17/2010 - 16:35 | Link to Comment Anonymous
Wed, 02/17/2010 - 18:07 | Link to Comment Anonymous
Wed, 02/17/2010 - 15:23 | Link to Comment AnonymousMonetarist
AnonymousMonetarist's picture

And Yellen got everyone to drop blood in a chalice shaped like the skullcap of the common man as they all took an oath that inflation targeting of 5% would provide the necessary lubrication.

Wed, 02/17/2010 - 15:25 | Link to Comment lsbumblebee
lsbumblebee's picture

"Hoenig, you haven't been the 'dissenter' for awhile. How 'bout we use your name this time?"

Wed, 02/17/2010 - 15:49 | Link to Comment SWRichmond
SWRichmond's picture

Yes, we really do have a strong dollar policy, after all.  Who wants to be the hawk?

Wed, 02/17/2010 - 16:02 | Link to Comment lsbumblebee
lsbumblebee's picture

"Right. Signed, B.B. That's done. Okay have our boys over at CNBCABCCBSAPFOXCNN use Hoenig's 'dissent' as an explanation for the USD pump up today. Say it was leaked. You know, the usual nonsense."

Wed, 02/17/2010 - 15:26 | Link to Comment DavidC
DavidC's picture

"..they judged that a program of asset sales spread over a number of years would underscore the Committee’s determination to exit from the period of exceptionally accommodative monetary policy in a manner and at a pace that would keep inflation contained without having large effects on asset prices or market interest rates..."

Yeah, right. The Fed has no intention of deflating, they want/need/must have a continued inflation in order to keep the Ponzi scheme going. Deflation (of which I am a proponent, given the current economic situation) will be FORCED on them.

FACT - between 1800 and 1912, the average annual inflation rate was - 0.35% (doubling time NEVER!). From 1913 to now average annual inflation rate 3.4% (doubling time about 20.6 years).

DavidC

Wed, 02/17/2010 - 15:28 | Link to Comment Racer
Racer's picture

No longer showed significant impairment..

You WHAT?

In other words, it still shows lots of impairment but not as bad as it was, it is still broke and we are still trying to fix it, hold your breath a bit longer.....

Wed, 02/17/2010 - 15:36 | Link to Comment monmick
monmick's picture

Mmmmm. ZIRP. Both the cause AND the solution to all my problems...

With apologies to Homer...

Wed, 02/17/2010 - 16:21 | Link to Comment faustian bargain
faustian bargain's picture

ZIRP...is there nothing it can't do?

Wed, 02/17/2010 - 15:42 | Link to Comment Astute Investor
Astute Investor's picture

Bernanke is Al Capone and Hoenig is on the wrong end of the bat...

http://www.youtube.com/watch?v=Zc9zF8G2Pvc

 

Wed, 02/17/2010 - 15:50 | Link to Comment Crab Cake
Crab Cake's picture

Screwed if they raise interest rates + Screwed if they keep interest rates at 0 = Screwed

Wed, 02/17/2010 - 16:03 | Link to Comment Anonymous
Wed, 02/17/2010 - 16:05 | Link to Comment order6102
order6102's picture

like it or not but, FED is on the move. Global rate hike cycle started. Aus, China, Korea and soon Fed and ECB will join... Risky assets will do badly in 2010... sell, sell, sell... sell everything... cash is the king - this why 3m bills at 0... 

Wed, 02/17/2010 - 16:22 | Link to Comment faustian bargain
faustian bargain's picture

because dollars are not at all risky.

Wed, 02/17/2010 - 16:21 | Link to Comment carbonmutant
carbonmutant's picture

Dr. Hoenig is certainly drawing a crowd...

Wed, 02/17/2010 - 16:24 | Link to Comment Anonymous
Wed, 02/17/2010 - 16:40 | Link to Comment knukles
knukles's picture

"....to exit from the period of exceptionally accommodative monetary policy in a manner and at a pace that would keep inflation contained without having large effects on asset prices or market interest rates."

Hah ha ha ha

Right.  And I want Santa to bring me a new Lindsay Lohan blow up doll.  Are they crazy?  No, they are crazy.  Desirous to do that which is necessary without effects or consequences.  Need a solid 10th Step.

Wed, 02/17/2010 - 16:42 | Link to Comment lsbumblebee
lsbumblebee's picture

"WASHINGTON (AP) -- The Federal Reserve expects unemployment will stay high over the next two years because recession-scarred Americans are likely to stay cautious, making for only a moderate-paced economic recovery."

http://finance.yahoo.com/news/Fed-Unemployment-will-stay-apf-4200940572....

Yes, jobs will be plentiful, but the "recession-scarred" workers will be too traumatized to fill them.

Wed, 02/17/2010 - 16:55 | Link to Comment MarketTruth
MarketTruth's picture

But the talking a$$hats heads say the USA will have a 'jobless recovery'. And if you believe the USA can have a jobless recovery i have three magic beans i'll trade you for a few JM kilo bars of 999 gold.

C'mon, is there anyone who actually believes the Fed anymore? Anyone? Bueller? Bueller?

Wed, 02/17/2010 - 17:01 | Link to Comment lsbumblebee
lsbumblebee's picture

When they use words like "moderate", "modest" and "slow", you know we're screwed.

Wed, 02/17/2010 - 17:17 | Link to Comment deadhead
deadhead's picture

from Ran Squawk:

 

Fed says has continued to reinvest proceeds of maturing treasuries by acquiring new issues

Sorry, these phucks aren't going to sell assets nor do I believe they will pull liquidity.....they will push it to the very end then all the politicians will blame each other, the Fed will blame the politicians and then.....I guarantee this will happen: the pundits on TV will all be asking "why didn't we see this coming"  "how could this have happened?"  "why did nobody speak out"   it's a guarantee, just a question of when.

Thu, 02/18/2010 - 03:29 | Link to Comment faustian bargain
faustian bargain's picture

People are just gonna be blindly pissed off. Scapegoat time!

Wed, 02/17/2010 - 17:30 | Link to Comment Anonymous
Wed, 02/17/2010 - 18:51 | Link to Comment Anonymous
Wed, 02/17/2010 - 20:44 | Link to Comment glenlloyd
glenlloyd's picture

The very fact that they intervened to begin with is the problem, and they can't see the consequences of non-market interest rates. It should surprise no one that the Fed would create another bubble to take over from the last one, it's the same song and dance every time. But every time they do this the magnitude of the bubble must be larger than the preceding one, and they've reached a point where the bubbles don't last the duration that they need and the size of the bubble they need cannot be achieved.

The moment they begin extricating themselves from the ultra-easy policy and QE I believe the whole thing will come down like a huge house of cards.

One sniff that this is falling apart and the rate will never be raised and the trillions will never be extracted, in fact I have always claimed that they would never be able to undo what they've done...we shall see.

The intervention itself changed the natural order of events...not permanently, but the postponement made the problems bigger. In their ivory tower it all looks like recovery and green shoots, but out here on the streets it smells of depression and collapse.

Just sayin...

Mon, 04/19/2010 - 08:37 | Link to Comment Tom123456
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