FOMC Highlights, Hoenig Dissention And Full Minutes
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.
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