Hilsenrath Sums Up The Fed Minutes In 2 Words "Exit Strategy"

Tyler Durden's picture

In a well-crafted 688 words published just 5 minutes after the minutes were exposed to the public, the Wall Street Journal's Jon Hilsenrath provides what bullish equity market believers might consider one of his more hawkish commentaries on what the Fed is really thinking. "Federal Reserve officials turned their attention to longer-run issues at their April policy meeting," he noted; adding that discussion of the Fed's "exit strategy" from low interest rates has heated up in recent weeks. His summation - lots of talk, no action... not what the bad-news-is-good-news crowd wants to hear.


Via WSJ's Jon Hilsenrath,

Federal Reserve officials turned their attention to longer-run issues at their April policy meeting, while concluding that their outlook for a gradually improving economy hadn't changed much in the previous weeks and warranted no change in policy.

They spent considerable time discussing how to manage interest rates when they eventually start to raise credit costs, but came to no conclusion on the matter, according to minutes of the April 29-30 meeting, which were released Wednesday with their regular three-week lag.

Moreover, they spoke at some length on an issue that has nagged at them for years—how to better communicate their thinking on the outlook for interest rates to the public. Some wanted the Fed to more clearly explain why officials believed interest rates can stay low even as unemployment falls. Others wanted to provide more clarity on how long it will keep its large portfolio of securities holdings. On those issues, too, they came to no new conclusions.

"In their discussion of the economic situation and the outlook, meeting participants generally indicated that their assessment of the economic outlook had not changed materially since the March meeting," the minutes said.

Public discussion of the Fed's "exit strategy" from low interest rates has heated up in recent weeks. William Dudley, president of the Federal Reserve Bank of New York,discussed the issue at length in a speech in New York on Tuesday.

The minutes showed the issue got a lengthy airing at the April meeting, with presentations from staff on the central bank's options, but the main conclusion was that officials need to keep testing their tools.

At the center of this debate: $4.3 trillion of securities held by the Fed and $2.6 trillion of money the central bank has pumped into the banking system known as reserves. Traditionally, when the Fed has raised interest rates, it has made small reductions in the supply of reserves in the banking system to push short-term bank borrowing costs. Because there are so many reserves now, it is exploring other options.

"A staff presentation outlined several approaches to raising short-term interest rates when it becomes appropriate," the minutes said. This included discussions of instruments called reverse repurchase agreements and a term deposit facility. Fed officials agreed to continue testing these programs without committing to an approach. "Participants requested additional analysis from the staff and agreed that it would be helpful to continue to review these issues at upcoming meetings," the minutes said.

The Fed aired a variety of low-level concerns about the broader economy at the meeting. Severe winter weather slowed activity in the first quarter. Output appeared to be reviving, though "some participants remarked that it was too early to confirm that the bounceback in economic activity would put the economy on a path of sustained above-trend economic growth."

"A number of participants pointed to possible sources of downside risk to growth, including a persistent slowdown in the housing sector or potential international developments, such as a further slowing of growth in China or an increase in geopolitical tensions regarding Russia and Ukraine," the minutes added.

Weighing against those worries, a number of officials "noted that business contacts in many parts of the country were generally optimistic about economic prospects, with reports of increased sales of automobiles, higher production in the aerospace industry, and increased usage of industrial power; in addition, a couple of firms with a global presence reported a notable increase in demand from customers in Europe."

In Fed staff projections, the outlook for economic growth in the first half of the year was "somewhat slower" than at the previous meeting. But its medium-run projection was unchanged.

"The staff continued to project that real [gross domestic product] would expand at a faster pace over the next few years than it did last year," the minutes said. "The faster pace of real GDP growth was expected to be supported by an easing in the restraint from changes in fiscal policy, increases in consumer and business confidence, further improvements in credit availability and financial conditions, and a pickup in the rate of foreign economic growth."

The staff inflation forecast wasn't changed.

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game theory's picture

Jean-Paul Sartre has a play just for this sort of thing: "Hell is - no inflation!"

buzzsaw99's picture

Moreover, they spoke at some length on an issue that has nagged at them for years—how to better communicate their thinking on the outlook for interest rates to the public..


NYPoke's picture

You pretty much summed up everything since 1913.

BullyBearish's picture

Be careful out there...global liquidity is DIMINISHING




Shizzmoney's picture

And by "Exit strategy", they mean, "they'll flee to Europe when the riots start thanks to their bullshit economic policies".

Serfs Up's picture

I believe it is spelled strategery.

power steering's picture

It's not a legimate word in the first place

NYPoke's picture

I got yer Exit Strategy right here.

Dr. Engali's picture

Lol... The only exit strategy the fed has is pulling a flight 370 in a plane full of gold flying off to which ever country they can buy protection in.  

DavidC's picture

I just want to put my head in my hands and cry with continued CRAP that is coming out of these fuckwits at the Fed.


sodbuster's picture

Meanwhile, these crooks steal from responsible people who try to work and save, and reward those who got us into this mess in the first place. Bernie Madoff's only mistake is he stole from the 1% and not from the 99%.

oklaboy's picture

they just figgure if they can't beat inflation, just join them.

OC Sure's picture




Televise the Fed meetings live on CSPAN.

This will remove all the smoke and mirrors and Hilsenrath can spend his time doing something else.


Dr. Engali's picture

They can't televise  the fed meetings because of what Hilsenbarf is doing to the fed heads in order to get inside information. We have to look out for the children.

The Most Interesting Frog in the World's picture

Does anybody truely believe these are the minutes of the real meeting?  I don't...

Bryan's picture

And all this comedy for the past 5 years only because TPTB thought that allowing some big players, who put their whole companies at risk on stupid investments, to be purged from the system was a bad idea.  TBTF my arse.  Politicians and other lamebrained business people should have gone down with the ship that they put together with chewing gum and string.

Seize Mars's picture

688 words in 5 minutes. That's 2.25 words per second. (Unless, you know, he actually had more seconds than that...)

yogibear's picture

In short the Federal Reserve can't exit. They can't even as inflation jumps double digits.

What a joke. 

silverserfer's picture


what would Krugman do? Huh bitch?

LawsofPhysics's picture

Exit you say?  Only once there is nothing left to steal, and then it goes something like the following scene, where America and the average american is represented by the restaurant...





teslaberry's picture

seriously why does zerohedge cover this stuff . anything they say is half true half lies and half deception and half blabal te real news is not ever coming from the mouthpiece of the fed. 


so why not ignore these fake news releases?



SheepDog-One's picture

'Most hawkish Fed utterances eva', etc etc....so in other words buy with both hands!

uno's picture

"Exit Strategy"  Nigga pleeze

just-my-opinion's picture

That is not very nice but....(Iron Maiden)....Run for The Hills

razorthin's picture

An entry opp for a short if you are so inclined.  I'm not.  Lost my face years ago.