After reviewing the economy, inflation, markets, discussing Europe and giving their economic outlook, the FOMC minutes reveal that things didn’t change too much from their previous meeting and it’s why they maintained their existing stance on policy. This comes notwithstanding QE3 talk from Dudley, Yellen, Tarullo and Evans in various speeches before the Dec meeting. While likely these members pushed their case, the minutes say “they believed that any additional actions would be more effective if accompanied by enhanced communication about the Committee’s longer run economic goals and policy framework.” They then went on further about a new communications strategy where members would give their forecasts for the fed funds rate. This new strategy will likely be employed at the Jan meeting. The meeting also discussed the move in Nov to lower the cost of swap lines to foreign central banks where Lacker dissented because he viewed the move “as amounting to fiscal policy.” Bottom line, we know the FOMC has QE3 ready and waiting based specifically on speeches from Yellen and Dudley over the last few months, the two key members of the committee outside of Ben. The question is only when. In terms of enhanced communication from the Fed, its not how they say it, it’s what the actual policy they are conducting that matters. When the History of the Fed book is written, by someone outside of the Fed, the track record of their policy will be the focus, not how they talked about.
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