Highlights of the minutes of the Dec meeting

  • A few policymakers raised concerns that keeping rates low for a long time could exacerbate imbalances in financial sector
  • Fed saw risks to outlook as tilted to the downside but that some risks had eased in recent months
  • More sanguine view of risks owed to easing US-China tensions, along with lower probability of no-deal Brexit
  • Topics for future discussion included composition of long-term Treasuries in holdings
  • Discussed expectations to gradually transition away from active repo operations next year
  • Some repos might be needed at least through April
  • Technical adjustments might be needed at some point for IOER and overnight repurchase rates

Expectations for this report and were low and these minutes managed to meet them. There is hardly any scope for a reaction from any Fed talk for the next few months. They're firmly on the sidelines and everything we heard to today fits into that.