According to the Fed, it’s everything but inflation

The FOMC minutes from the purposely boring Dec meeting after the major criticism they received after the Nov one did not reveal much new news but they gave their opinion on why rates rose after their intentions to have them remain low. They think “investors reportedly revised down their estimates of the ultimate size of the FOMC’s new asset purchase program…Incoming economic data that were viewed as favorable to the outlook” and also concerns with higher deficits. They also said there were “abrupt changes in investor positions, the effects of the approaching yr end on market liquidity,” and hedging related impact from holdings of MBS. Basically, the Fed listed every single reason EXCEPT a rise in inflation, notwithstanding the sharp jump in commodity prices and move up in inflation expectations. They continue to see little inflation pressures (I believe mistakenly) which they feel give them license to print.

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