Monday, 6 Dec 2021

June FOMC minutes don't much alter taper narrative

NEW YORK (Reuters) – Federal Reserve officials last month felt that substantial further progress on the economic recovery “was generally seen as not having yet been met,” though participants expected progress to continue, according to the minutes of the U.S. central bank’s June policy meeting.

FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo

“Various participants” at the session still felt conditions for reducing asset purchases would be “met somewhat earlier than they had anticipated,” while others saw a less clear signal from incoming data, said the minutes, where were released on Wednesday.

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COMMENTS:

RYAN DETRICK, SENIOR MARKET STRATEGIST, LPL FINANCIAL IN CHARLOTTE, NORTH CAROLINA

“It doesn’t seem (the Fed) rocked the boat too much, there’s talk about easing up on asset purchases and that’s not much of a surprise. We’re not getting a massive reaction here. Nothing out of the ordinary.

“‘Transitory’ is a word we’ve heard time and time again, and they’re kind of easing away from that, they are opening the door to the idea that inflation might be here a little longer. The Fed’s like a family and clearly they’re not all agreeing, but that’s been the word from Chairman Powell and there’s no major changed toward taking that away.”

BOB MILLER, HEAD OF AMERICAS FUNDAMENTAL FIXED INCOME, BLACKROCK, NEW YORK (email)

“Today’s FOMC minutes revealed a substantial dispersion of opinions among Committee members, as it has become increasingly difficult to ignore the vast improvement in the domestic economic environment, as well as the better virus/vaccine-related conditions.”

“Monetary policy recalibration is now on the table, as the FOMC becomes genuinely more data dependent and less calendar dependent. The Minutes today reflected a Committee that has started to shift its emphasis from realized economic outcomes to a more outlook-dependent reaction function. The upside/downside surprises for relevant economic indicators should now lead financial markets to adjust the distribution of outcomes with respect to tapering asset purchases and eventual lift-off from zero interest rates.”

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