FOMC Minutes Released Early, Several FOMC Members Saw QE Tapering, Halt By Year End

Highlights from the pre-leaked minutes, which are along the lines of previous releases, in which there is a hint of an early QE tapering and halt by year end. Here is the key excerpt:

In light of the current review of benefits and costs, one member judged that the pace of purchases should ideally be slowed immediately. A few members felt that the risks and costs of purchases, along with the improved outlook since last fall, would likely make a reduction in the pace of purchases appropriate around midyear, with purchases ending later this year. Several others thought that if the outlook for labor market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end. Two members indicated that purchases might well continue at the current pace at least through the end of the year.

Algos unsure if this means QE may be ending. The answer, of course, is no. But the Fed is doing everything to gauge market impact to increasingly more ominous and harsh language.

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Some other highlights:

On Fed credibility: "Some participants were concerned that a substantial decline in remittances might lead to an adverse public reaction or potentially undermine Federal Reserve credibility or effectiveness."

On inflation: "...a few participants noted that the risk remained that inflationary pressures could rise as the expansion continued, especially if monetary policy remained highly accommodative for too long."

On QE: "...Asset purchases were seen by some as having a potential to contribute to imbalances in financial markets and asset prices, which could undermine financial stability over time."

On QE Tapering: "Many participants, including some of those who were focused on the increasing risks, expressed the view that continued solid improvement in the outlook for the labor market could prompt the Committee to slow the pace of purchases beginning at some point over the next several meetings," ... "Several others thought that if the outlook for labor market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end."

Esther L. George. dissent: "the current stance of policy could lead to financial imbalances, a mispricing of risk, and, over time, higher longterm inflation expectations... asset purchases were providing relatively small benefits, and, given the risks that they posed as well as the improvement in the outlook for the labor market, she thought they should be wound down.

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