FOMC Minutes Show Fed Split Over Asset-Purchase Plans

The market has ripped higher since the November 5th FOMC statement (helped by vaccine hype and election hope) and it seems from the Minutes that there is some disagreement in the central planning ranks.

The key sentence in the well-managed Minutes was:

“Many participants judged that the Committee might want to enhance its guidance for asset purchases fairly soon.”

Many Fed officials saw bond-buying as insuring against risks…

“Most participants favored moving to qualitative outcome-based guidance for asset purchases that links the horizon over which the Committee anticipates it would be conducting asset purchases to economic conditions.”

But there was disagreement…

“A few participants were hesitant to make changes in the near term to the guidance for asset purchases and pointed to considerable uncertainty about the economic outlook and the appropriate use of balance sheet policies given that uncertainty.”

But others fear they may have reached their limit…

“Several participants noted the possibility that there may be limits to the amount of additional accommodation that could be provided through increases in the Federal Reserve’s asset holdings in light of the low level of longer-term yields, and they expressed concerns that a significant expansion in asset holdings could have unintended consequences.”

As a few hawks saw bubbles…

“A few participants expressed concern that maintaining the current pace of agency MBS purchases could contribute to potential valuation pressures in housing markets.”

There was very little reaction in markets to the Minutes.

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Full Minutes below:

Minutes of the Federal Open Market Committee, November 4-5, 2020 by Zerohedge on Scribd