Fed Minutes: “Almost All” Fed Officials Want Plan To Stop Reducing Balance Sheet By Year End

Fed Minutes: “Almost All” Fed Officials Want Plan To Stop Reducing Balance Sheet By Year End from ZeroHedge

TDC Note – Just as we said earlier today – the bullion banking cabal will not allow gold and silver to rise as they have over the last day and a half.

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Key update: it appears that in its rush to blast the fastest headline on the Minutes, Bloomberg made a material error, reporting the following:

  • BBG: ALMOST ALL FED OFFICIALS WANTED TO HALT RUNOFF LATER THIS YEAR

That however is incorrect, and Reuters captured what the Fed really said, which is significantly different from what the Fed actually said, to wit:

  • REUTERS (correct): ALMOST ALL PARTICIPANTS THOUGHT IT WOULD BE DESIRABLE TO ANNOUNCE PLAN TO STOP REDUCING BALANCE SHEET LATER THIS YEAR

And here what the Fed actually said:

Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year.

Needless to say, there is a huge difference between “ending runoff” and “announcing a plan to stop the runoff”, as the former may last well into 2020 or even 2021.

Aside from that the highlights were in keeping with what Powell said in January namely that:

  • The Fed will remain patient in light of ambivalent economic and market data.
  • The Fed’s outlook for the economy and the policy rate have both become more uncertain
  • Keeping the current policy rate for now “posed few risks”
  • As various Fed speakers noted recently, higher than expected inflation may be a requirement for more rate hikes
  • The Fed was worried that the dot plot -which has become a Fed forecasting farce – is being “misinterpreted.”

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Amid today’s “inclement weather” FOMC minutes delay, which prevented the Fed from releasing the Jan Fed meeting minutes to a media lockup ahead of their public release, thus making impossible the dissemination of headlines and prepared news stories to go alongside the minutes release at 2:00pm, there was a bit of a scramble to grab the most salient highlights from the Fed minutes for a meeting that was seen as pivotal for the Fed, one where the US central bank surprised with a dovish reversal, effectively putting on hold any further rate hikes while cautioning that it was prepared to adjust its balance sheet unwind which until that moment was said to be on “autopilot.”

With that in mind, and with traders desperate to find any further hints of either renewed hawkish sentiment or a more pronounced dovish reversal, here is what has emerged as the key highlights from today’s minutes.

On General economic conditions – nothing new here and the Fed continues to tread a fine line between being dovish on slowing economic conditions and hawkish on strong economic data, i.e. “data dependent”:

  • *FED OFFICIALS NOTED SOME DOWNSIDE RISKS HAD INCREASED
  • *FED OFFICIALS SEE CONTINUED SUSTAINED EXPANSION
  • *FED OFFICIALS SAY RECENT HOUSEHOLD DATA HAVE BEEN STRONG
  • *FED OFFICIALS SEE STRONG LABOR MARKET, INFLATION NEAR TARGET
  • *FED OFFICIALS NOTE BUSINESS INVESTMENT HAD MODERATED

On the increase in “downside risks”:

  • “the decline in inflation compensation might reflect in large part declines in risk premiums or increased concerns about downside risks to the outlook for inflation. This interpretation was seen as consistent with the behavior of the most recent survey-based measures of expected inflation, which were little changed.”

On the market’s influence over the Fed:

  • FOMC communications were reportedly perceived by market participants as not fully appreciating the implications of tighter financial conditions and softening global data over recent months for the U.S. economic outlook
  • Market participants pointed to a number of factors as contributing to the heightened volatility and sustained declines in risk asset prices and interest rates over recent months including a weaker outlook and greater uncertainties for foreign economies (particularly for Europe and China), perceptions of greater policy risks, and the partial shutdown of the federal government
  • Market participants appeared to interpret FOMC communications at the time of the December meeting as not fully appreciating the tightening of financial conditions and the associated downside risks to the U.S. economic outlook that had emerged since the fall
  • Participants agreed that it was important to continue to monitor financial market developments and assess the implications of these developments for the economic outlook.

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