The Minutes of the FOMC meeting December 15-16 displayed on Wednesday showed that policymakers saw fit to continue asset purchases at least at the current rate.
Market reaction
The US Dollar Index largely ignored this statement and was last seen gaining 0.08% on the day at 89.50.
Key findings summarized by Reuters
“The participants agreed that the trajectory of the economy would depend on the course of the virus.”
“FOMC members felt that the positive news on vaccine development further strengthens the medium-term outlook for household spending.”
“Participants said that the judgment on further substantial progress would be broad, qualitative, and not based on specific numerical criteria or thresholds.”
“They saw greater challenges for the economy in the coming months due to the increase in COVID-19, social distancing, and reduced spending, especially on services that require in-person contact.”
“Several participants noted the importance of clearly communicating assessment progress toward goals well in advance of the time required for a change in the pace of asset purchases.”
“Members commented that overall labor market conditions had continued to improve, but were still a long way from the maximum employment goal.”
“A couple of participants were open to weighting purchases of treasuries towards longer maturities.”
“They generally judged the asset purchases to be providing a very significant political accommodation.”
“Some participants expressed concern about the potential for lasting damage to the labor market.”
“Some participants noted that the Fed in the future could increase the amount and duration of asset purchases if deemed appropriate to achieve the targets.”
“Participants noted that soft inflation patterns were expected to continue in the short term as concerns about the pandemic intensified over the winter.”
“Some participants highlighted the importance of weighing the costs and risks of buying assets against the benefits.”
“Participants in general saw downward pressures on inflation that began to decline in 2021 with the launch of the vaccine.”
“Participants highlighted the differences in the availability of credit among borrowers, as financing terms softened for large corporations but tightened for small businesses and households.”
“Some members noted that once substantial progress has been made, the Fed could begin to scale back.”
“Several participants noted that the eventual QE tuning could follow a similar sequence to 2013 and 2014.”
“Several participants saw negative risks associated with the discontinuation of the” 13-3 “emergency programs on December 31.”
“Participants continued to consider the uncertainty surrounding the economic outlook high.”
“All participants supported the decision to adopt a qualitative, results-based guidance for asset purchases.”
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