The minutes from the April FOMC meeting have to be seen as old news in terms of their view of the economy since so much has changed with Europe and China over the last 3 weeks. There was comfort from most members with their benign outlook on inflation which in turn gives them the belief that they have a license to keep policy extremely easy still, notwithstanding the slowly improving economy. With respect to asset sales, they said “most participants favored deferring asset sales for some time” and interestingly, a “majority preferred beginning asset sales some time after the 1st increase in the FOMC’s target for short term rates.” On how long it will take to sell, many thought about 5 years. Hoenig, who is not happy with the “exceptionally low” for “extended period” wording, wants to raise rates toward 1% this summer as this would still be highly accommodative.
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