The minutes from the Apr 26-27 FOMC meeting focused a lot on the exit strategy of its current extraordinary policy BUT the key question that was not answered and not really discussed was WHEN as they said “the 1st key issue was the extent to which the Committee would want to tighten policy, AT THE APPROPRIATE TIME…” The first step, when it happens, would be the halt to the reinvestment payments of principal on agency paper and Treasuries but they said specifically that they don’t know yet when this will happen. Bottom line, they know the party has to end at some point soon but there is no time yet on when. Their continued concerns with growth and belief that notwithstanding the rise in commodity prices and inflation readings, has them still unsure when to proceed with the unwind. Mark this down as my personal guarantee, the unwind won’t be a pretty, smooth process and is potentially going to be highly disruptive just as taking away heroin from an addict is messy (from what I’ve read).
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