Is Jawboning All The Fed Has Left? Goldman's Take On The FOMC Minutes

Tyler Durden's picture

It seems from our initial take on the minutes from the last FOMC meeting that there was a lot of talk about how to tell us mere plebeians what they are not capable of doing as opposed to actually doing anything. Maybe, given Bernanke's recent comments and subtle suggestions towards the need for fiscal policy, all the Fed has left is jawboning and their new policy of talking about potential policy. Goldman's rather less pessimistic perspective sees a communications policy aimed at explicit rate paths and they note the unusual inclusion of a 'risks and uncertainties' section - no longer then perhaps Bernanke's '100% sure' view of his actions.


Goldman Sachs: GS Skinny-Communications Options

BOTTOM LINE: November FOMC minutes showed detailed discussion of communication options. We expect the Fed to begin publishing explicit funds rate path at January FOMC meeting.




1.     Minutes from the November 1-2 FOMC meeting showed that Fed officials held a detailed discussion of possible changes to policy communication. The committee debated the following four options, listed here in order of likelihood of being enacted, from most likely to least (based on our assessment): (1) publishing an explicit path for the federal funds rate; (2) specifying an inflation target, and possibly clarifying other aspects of the committee’s longer-run goals; (3) introducing threshold-based policy rules such as the one advocated by Chicago Fed President Evans; and (4) introducing a nominal GDP target.


2.     Publishing a path for the funds rate appeared to have broad support on the committee, and we expect this tool to be introduced at the January FOMC meeting. An inflation target is a closer call, and some officials expressed concerns about this option at the meeting. The committee may ultimately decide go in this direction, but it would probably also need to take other steps that emphasized an equal focus on the other half of the dual mandate. Although the minutes acknowledged that “nominal GDP targeting could, in principle, be helpful in promoting a stronger economic recovery,” a number of participants expressed concern that switching to a new policy framework could heighten uncertainty about future monetary policy, unmooring long-term inflation expectations. As a result, we do not think that threshold-based policy rules or nominal GDP targeting are likely to be introduced by the committee in the near future.


3.     The minutes noted that “a few members” thought that the outlook may warrant further easing, but that “any such accommodation would likely be more effective if it were provided in the context of a future communications initiative”. Unlike recent comments from a few Fed officials (e.g. New York Fed President Dudley’s remarks last week), the minutes did not contain a discussion of purchases of MBS or other securities.


4.     For the first time the minutes included a discussion of “uncertainty and risks” in Fed officials’ economic forecast. Committee members see elevated uncertainty about the outlook, roughly balanced risks around inflation, and downside risks to growth (meaning “they judged that economic growth was more likely to be below their projection of its most likely outcome than above it”).


5.     The remainder of the minutes was broadly in line with the Chairman’s post-meeting press conference.

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Shock and Aweful's picture

Enact this law here...and half of the investment "gurus", market insiders, fund managers, and bankers would be eliminated immediately....

Seriously...they should maybe consider passing a law....they could give it some nationalistic the "Reign in the fiscal weapons of mass destruction and financial terrorists Act"....

Could you imagine the blood in the streets if they enacted something like this here? 

Not just bankers and fund mangers either....there are so many goddamn crooked ass people in this country....stealing from others to get ahead is considered being a "go-getter" anymore....(as long as you steal with a pen and not a gun....then you are a fucking menace to society and need to be locked up with all those no-good drug dealers and addicts. (In our for-profit prison system)

However, consideriing that I only seem to see the police carrying water for the criminal's these days...I doubt a law like this would be enforced....unless it is carried out via vigilante justice?  

I am sure we could make up a few million police badges and start handing them out....

LETS ROUND EM UP!!!   hahaha


johnu78's picture

When I see the word "Jawbone" it makes me think of the clip in that movie "Rollover" when Hume Cronyn gives his little speech and then the whole U.S. economy collapses. Here's the clip of that:



GeneMarchbanks's picture

No. They have 'tools' OK?

TruthInSunshine's picture

The Bernank's masters want to drink everyone's milkshake. And I mean every last damn milkshake.

Fred Garvin's picture

Still love this clip...

Here is a clip of Benny and Timmy saying what they really think...go to exactly 3 min 50 secs into the clip, the next 10 seconds says it all!

PicassoInActions's picture

BDM is a changed man... Soon he will be like mother Teressa

JohnG's picture

".....and we expect this tool to be introduced at the January FOMC meeting."

So, yet another Fed member?


SheepDog-One's picture

Im so happy to see their Keynesian BS such as 'animal spirits' philosophy dashed on the jagged rocks....NO you CANT force people here and there like cattle, like in the boy who cried wolf, people call 'BS' after they hear the same nonsense over and over again.

Mark123's picture

Who cares what these crooks have to say.  I thought we lived in a republic, not a debtor's prison?

Snakeeyes's picture

Can they go lower? Yes. Will it make any difference? No. But it does risk massive inflation if they can't pull out fast enough.

Lower GDP growth, Euro melting down, ... Treasury Direct: $35 billion 5yr at 0-7/8% – Fed Talks More Easing

AldoHux_IV's picture

Inflation and nominal gdp targeting is just borrowing a page from China, and we all know how well that is going.

Crony capitalism bitchez!


SheepDog-One's picture

Damn straight all the FED has left is jawboning. 

mayhem_korner's picture



Draghi = abomination that causes desolation?

DormRoom's picture

Fed cannot print.  If they do so, it would implode Japan form a collapse in USD-JPY, and our vital ally in South Asia (hint Chinese theatre of war).

kito's picture

now that ben hasnt loosened the monetary stool since the spring, when is this market sell off going to happen? 

Georgesblog's picture

That's the rule of deception. If you can't persuade with rational presentation, baffle them with double talk and confusion. keep them guessing.