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FOMC Minutes Preview

Tyler Durden's picture





 

Bank of America expects the FOMC minutes to reveal broad support for the continuation of "measured" tapering, with general discussion around what conditions might lead the FOMC to deviate from a $10bn per month pace, but few, if any, specifics. A small number of Fed officials are likely to express worry about the costs and efficacy of QE, but the majority should see those as less important and focus on signs of continued recovery in the labor market. Forward guidance is likely to have less agreement, with a few members supporting reducing the unemployment threshold, a few favoring no change at all, and several supporting a shift toward a more qualitative approach. We expect the FOMC to drop the unemployment threshold and introduce vaguer but more robust qualitative guidance at their March meeting.

Via BofAML,

The minutes of the January FOMC meeting are likely to reveal a number of debates within the Committee but not necessarily much resolution. Recall that weather was just starting to become a significant potential explanation for a rash of soft data reports, while the turmoil in global financial markets was in full force.

We look for Fed officials to acknowledge some risks to the outlook, but largely view them as short-lived and not moving their expectations for continued improvements in US growth and employment.

On inflation, Chair Yellen's testimony made it clear that the FOMC still isn't particularly worried about the persistently low rate. We expect an active debate all year about cyclical vs. structural sources of labor market weakness and the risks to the inflation outlook.

A number of Fed officials see a significant share of the unemployed as structural, but many others still see some role for monetary policy to offset lingering cyclical forces. A few have suggested that the persistently low inflation means that there may be more slack in the economy than some labor indicators imply.

On policy, we expect the minutes to reveal broad support for the continuation of "measured" tapering, with general discussion around what conditions might lead the FOMC to deviate from a $10bn per month pace, but few, if any, specifics. A small number of Fed officials are likely to express worry about the costs and efficacy of QE, but the majority should see those as less important and focus on signs of continued recovery in the labor market.

Forward guidance is likely to have less agreement, with a few members supporting reducing the unemployment threshold, a few favoring no change at all, and several supporting a shift toward a more qualitative approach. We expect the FOMC to drop the unemployment threshold and introduce vaguer but more robust qualitative guidance at their March meeting. There may be some additional discussion of other ways to strengthen guidance as asset purchases wind down.

Further consideration of the operating procedures during the exit strategy is likely as well, and this too should be an ongoing discussion this year.

 


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Wed, 02/19/2014 - 14:35 | Link to Comment TeamDepends
TeamDepends's picture

Vaguer but more robust?  Is that like PHD (piled higher and deeper)?

Wed, 02/19/2014 - 14:46 | Link to Comment macholatte
macholatte's picture

 

A little help please.......

Are they talking about tapering $10B/month until zero QE or just holding the $75B/mo that they are currently printing?

Wed, 02/19/2014 - 14:51 | Link to Comment TeamDepends
TeamDepends's picture

Yes.

Wed, 02/19/2014 - 15:08 | Link to Comment SamAdams
SamAdams's picture

no, si, no

Remember, God gave them the right to print money from thin-air and charge you for it!  You should be thankful that you get to be a part of it...

Wed, 02/19/2014 - 14:28 | Link to Comment ZDRuX
ZDRuX's picture

So basically there are some possible problems... but not really.

Wed, 02/19/2014 - 14:32 | Link to Comment Winston Churchill
Winston Churchill's picture

They may as well be written in Mandarin for all
the use they are.

Wed, 02/19/2014 - 14:33 | Link to Comment Seasmoke
Seasmoke's picture

Soon they will be. 

Wed, 02/19/2014 - 14:33 | Link to Comment playnstocks
playnstocks's picture

Its FED speak... totally confusing with no real direction

Wed, 02/19/2014 - 14:36 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Other famous Fed statements;

"we will never directly monetize the debt"

and

"the sub-prime lending problem is contained"

roll the motherfucking guillotines...

nothing changes otherwise.

Wed, 02/19/2014 - 14:34 | Link to Comment gjp
gjp's picture

Fed minutes don't matter.  Whatever they say, the bailout queens know from actions that they'll be there again when the chips are down.  So might as well ratchet the base ever higher in the meantime.

Wed, 02/19/2014 - 14:40 | Link to Comment EuropeanBankster
EuropeanBankster's picture

Production, Nonfarm, Unemployment, Manuf. PMI, Housing Starts, Retail sales disappointments all due to cold weather... move along, nothing to see

Wed, 02/19/2014 - 14:37 | Link to Comment The_Ungrateful_Yid
The_Ungrateful_Yid's picture

As long as Fuckbook and the rest of the useless social media stocks are up...what else matters right?

Wed, 02/19/2014 - 14:39 | Link to Comment LordAarioc
LordAarioc's picture

Fed Talk is like that one black and white Comedy Skit, "Who's on First ?"

Wed, 02/19/2014 - 14:49 | Link to Comment Yen Cross
Yen Cross's picture

   Blah blah blah...Blobity blah blah... a wah wah... wah wah $65 billion..wah wah March meeting.

  ----end of transmission---

Wed, 02/19/2014 - 14:52 | Link to Comment Kaiser Sousa
Kaiser Sousa's picture

man, FUCK THE MOTHER FUCKING FED....

now back to the program...

stackin............................................................................

 

Wed, 02/19/2014 - 15:04 | Link to Comment devo
devo's picture

At some point they're going to buy stocks. I'd imagine we get a corporate tax holiday first, though. Stocks might hit 50k before this is all done.

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