FOMC Minutes Show Fed Taper Continuing But Forward Guidance Confusion

Tyler Durden's picture

With a plethora of Fed speakers playing good cop, bad cop todasy, it is hardly surprising that the FOMC minutes (as adulterated as they are) still show disagreement...


The bottom-line is that the Fed is very confused and while headlines will crow of communication and forward-guidance, it is clear they are winging it now as "qualitative" guidance is the new way forward.

Choice excerpts,

First, forward guidance is now dead. Long live forward guidance:

Participants agreed that, with the unemployment rate approaching 6½ percent, it would soon be appropriate for the Committee to change its forward guidance in order to provide information about its decisions regarding the federal funds rate after that threshold was crossed. A range of views was expressed about the form that such forward guidance might take. Some participants favored quantitative guidance along the lines of the existing thresholds, while others preferred a qualitative approach that would provide additional  information regarding the factors that would guide the Committee’s policy decisions.

Perhaps just as importantly, the Fed is close to admitting all it cares about is the S&P 500:

Several participants suggested that risks to financial stability should appear more explicitly in the list of factors that would guide decisions about the federal funds rate once the  unemployment rate threshold is crossed, and several participants argued that the forward guidance should give greater emphasis to the Committee’s willingness to keep rates low if inflation were to remain persistently below the Committee’s 2 percent longer-run objective.

On the emerging market turmoil:

Inflation in emerging market economies remained moderate on average, although Brazil, India, and Turkey again tightened monetary policy during the intermeeting period in response to concerns about inflation and currency depreciation. The policy tightening in Turkey was particularly sharp and followed several days of heightened financial market pressures toward the end of the intermeeting period. Similar pressures were evident in some other emerging market economies as well.


In contrast, amid a ratcheting-up of financial market strains in some emerging market economies, headline stock price indexes in most emerging market economies declined, outflows from emerging market mutual funds continued, and yield spreads on dollar-denominated emerging market bonds increased. Local-currency yields rose in some emerging market economies, such as Brazil, South Africa, and Turkey, and short-term interbank rates in China were volatile and trended higher over the period.


In considering recent events in emerging market economies, the staff judged that the effects of recent financial market volatility had not been large enough to have a material effect on the overall outlook for those economies and, similarly, that the spillover effects on the United States of developments to date were likely to be modest. Because conditions were in flux, however, these markets would require careful monitoring.

It seems that tapering of $10 billion per meeting unless it snows in August, is a given:

Several participants argued that, in the absence of an appreciable change in the economic outlook, there should be a clear presumption in favor of continuing to reduce the pace of purchases by a total of $10 billion at each FOMC meeting. That said, a number of participants noted that if the economy deviated substantially from its expected path, the Committee should be prepared to respond with an appropriate adjustment to the trajectory of its purchases.

On the use of the Fed's reverse repo as a means to provide collateral to collateral-starved banks:

Messrs. Fisher and Plosser dissented because of their preference for retaining a cap on the maximum size of counterparties’ offers during the extension; Mr. Plosser also preferred a shorter extension of the exercise.

Full minutes below:

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fuu's picture

Down goes Frazier. Sac get a new router...

French Frog's picture

The narrative is similar to what Goldman's old boy Carney is doing at the BoE:

1) set a threshold on 1 piece of data that you think is unlikely to get reached soon: in the UK, 7.0% unemployment and explain it that way: "we have decided to use this because it is data that is widely reported and available to the general public at large" - this makes the BoE look very transparent and it gives the masses/'journalist' no excuse to say that forward guidance is not clear.

2) if that threshold looks like it will get reached earlier than expected (as is the case in the UK), then move to a different piece(s) of data. That's the problem with doctoring data: it paints a rosier picture for a while but it also backs you into a corner eventually (as the US BLS well knows).

3) rather than make the same mistake, you then pick a combination of data (unemployment rate, CPI...) with broad thresholds and you explain it this way:"a mix of data will allow us to make a better judgement (lol) based on a more balanced view of the overall economy". Again the sheeples/journalists are either confused/re-assured/able to write another article, and this buys you more time...

Wash/rinse/repeat as it has been stated in here many times before.

Wait What's picture

Lucy used to do this to Charlie Brown all the time.

when officials overseeing the game don't want the other team to score they simply move the goalposts.

they've been doing this for a long time, changing the rules as they go along. Mark-to-Market? Glass-Steagall? the uptick rule? everything in the name of 'financial stability' but we know whose interests they are really perpetuating.

these are the kinds of children you don't play Monopoly against, they will always cheat.

EscapingProgress's picture

Do not try to taper, that is impossible. Only try to understand that there is no taper.

Fed attempting spur rehypothecation they are.

DrunkenMonkey's picture

Where do you think Carney gets his direction from ?
He was employed because of his connections after all.

This way it looks as if the worlds central banks are in lockstep, since if they started pulling in different directions the markets would get très nervous.

Ultimately, no-one will unwind their QE without asking Janet first.

Tinky's picture

When in doubt, act like a lout.

The_Ungrateful_Yid's picture

If it tastes like chiken keep on lickin, if it smells like trout, get the fuck out.

deflator's picture

 If it smells like fish, eat all you wish.(you know what you are dealing with)

If it smells like cologne, leave it alone.(they are trying to cover something up)

LawsofPhysics's picture

Their "confusion" is similar to the "confusion" you see in the face of a criminal when they know they are busted...


Start executing the perps, nothing changes otherwise.


TeamDepends's picture

Agreed as long as they are dragged in front of Grand Juries first and formally prosecuted.  Can't sink to their level of lawlessness, as tempting as that may be at times.

101 years and counting's picture

the Fed fucked everything up so bad, they got to print 3.3 Trillion (so far) to try to fix their fuck-ups.  and all it has done, is fuck the poor and middle class by promoting inflation during a period of wage deflation.  these fuckers dont even deserve a trial.  straight to the nooses!!!

order66's picture

All of this of course is bullish.

Yen Cross's picture

  God, Joe LaVorgna is a fucking shill! I swear, any more then 30 seconds of CNBS and I want to tear my hair out!

Obama_4_Dictator's picture

This should be fun....any regular american who is not paying atention is about to get raped (rightfully so, IMHO).   Get the lube out.

Obama_4_Dictator's picture

Come on the -1...You have to admit we kinda deserve everything that's coming because people are asleep at the wheel.

NoDebt's picture

You gotta have a thicker skin that that around here.  One down arrow and you're rushing to the keyboard to complain?

You should learn a little trick from the BLS- just don't count the down-arrows.  

Besides, they don't even hurt.  Hold my beer a second and watch this:


101 years and counting's picture

the Fed has never predicted a recession.  100+ years of proving incompetence leads the country.

Winston Churchill's picture

The FedRes's creation was supposed to stop recessions
How could it predict an impossibility.

deflator's picture

 Deflation is the strongest weapon in their arsenal. When the government and their crony capitalists partners spread out around every locale(and probably a good bit of the world)  want to take over a huge swath of the economy, the FED cuts back on the money supply and just watches it all burn for awhile then once the deed is done, allows the chosen few to buy everything on the cheap with fresh fiat at zero interest.

akak's picture


Deflation is the strongest weapon in their arsenal

I don't think you are properly using that word, as your statement makes no sense.

There are many things about which I worry today, but an appreciating in value fiat currency with an enhanced purchasing power is, unfortunately, not one of them.  The fact that such a thing has NEVER been seen, not once in human history, tends to support my skepticism that it ever will be seen.

deflator's picture

Semantics is not something we should be arguing. Although I agree with your definition of deflation, I do not think that it is consistent with the mainstream status quo(doublespeak) definition.


 Somebody needs to post a doublespeak to Austrian,  pocket translator here on ZH...

Dr. Engali's picture

They need the steady lip of the Bernank.

monopoly's picture

Am I the only one who is so sick of this shit? Can't we get this over with? I guess the Great Inflation is first and then the Grand Reset. Enough already.

Winston Churchill's picture

Patience Grasshopper.
Its so close you can smell it.
Use the remaining time well.

NoDebt's picture

"* Several FOMC participants said temporary factors spurred growth"

Yeah, the smart ones said it (which must have taken some stones in that room full of clueless economists).  No wonder they shut off web access to ZH at the Federal Reserve.  Can't have those people learning the truth and saying it in the FOMC minutes.

Unknown Poster's picture

The FED will continue tapering, but will buy bonds if rates go up. Tapering isn't easing they say.

jcamargo's picture

"Forward guidance" is fedspeak for "Feinting the suckers".

Kaiser Sousa's picture

presented without comment....

except - want to see a fraudulent market....

Stoploss's picture

This is exactly why confidence in paper is gone.

It would appear gold is about to bash in the head of the FED...

In the movies, after the monster is beaten for hours, it very slowly, rises, extremely pissed off, resulting in the classic deer in the headlights expression on the face of the previous monster killing bad ass who is about to be destroyed by said pissed off monster.

That means MATH must be in the building... Somewhere..

Oh shit..

Save_America1st's picture

All should know by now that both 10 Billion tapers were already cooked into the books last year.  Starting around last July the Fed was actually monetizing around 130 Billion per month in anticipation of the Bernank leaving and handing over some tapering to Yellen.  So they're still pumping over 100 Billion per month...not 65 Billion as they would have us believe.  And even that is causing massive convulsions across the planet.

Yellen will have to start pumping again and once again they'll be pumping 130+ Billion a month while psychologically passifying the world on the lie of it being 85 Billion or whatever.  By the time they actually admit that they're pumping 100 Billion per month it'll actually be 150 Billion, and so on. 

There's no other way out for them until this whole thing collapses, plain and simple.  It's just a matter of time as they continue to prepare themselves internally for the end of the dollar hegemony and the changing of the monetary gaurd from out of the Fed's hands and into some other system with the IMF or China or who the fuck knows.

Makes sense that they put some innocent looking little old woman, Yellen, in charge of the end of the decline.  Psychologically it fucks with the sheeple's minds even more as they can't fathom they're lives are being destroyed by some harmless looking little old lady who's really just another devil in disguise.

People better be getting ready for the big hit, cuz I'm pretty sure it's coming one way or another and it's not far off on the horizon.  We just don't know what speed yet it's coming at us.  The powers that be will determine when to pull the trigger though, and that's when shit's going to get ugly for America very fast.

Keep stacking and getting yourselves and others prepared, folks!  Silver phyzz is still on sale...for now....

Tick-tock, bitchez...

cougar_w's picture

"Qualitative guidance" for some reason sounds like they are going to be reading chicken entrails.

Spungo's picture

translation of fed minutes:

herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp herp derp

Seasmoke's picture

i love to see how the Unemployment % switched on them and actually made them look like the assholes they really are

malek's picture

Hmm, am I the only one reminded of Greenscam raising interest rates by 0.5% regularly - how did that work out?

Atlantis Consigliore's picture  Its those guys da bad guys....... $ 500 for a stinkin bottle of grapes 

Atlantis Consigliore's picture   Its Dos guys are da bad guys.... $ 500 for a bottle of grapes, $ 6.50 for a pound of hamnburger and theres no inflation. 

                                              Dos guys are da crooks.   ask Frank.....knock knock...

JailBanksters's picture

I reckon, these FOMC meetings are just like Wheel of Fortune.

Come on Jan, you have a spin

Round and Round she goes where she stops nobody knows

are we there yet's picture

FOMC is secritive because they would be embarased if the public knew how they are based on fuzzy science applied to made up fed numbers with political agenda mixed in to do what little they do. I agree withthe author, FOMC is confused for good reason.  They have no control over our core economic long term problem causes.