WASHINGTON (MNI) – The following is an excerpt of the Aggregate
Monetary Policy section from the text of the minutes of the Federal Open
Market Committee’s January 24-25 meeting published Wednesday:
Participants also provided qualitative information on their views
regarding the appropriate path of the Federal Reserve’s balance sheet. A
few participants’ assessments of appropriate monetary policy
incorporated additional purchases of longer-term securities in 2012, and
a number of participants indicated that they remained open to a
consideration of additional asset purchases if the economic outlook
deteriorated. All but one of the participants continued to expect that
the Committee would carry out the normalization of the balance sheet
according to the principles approved at the June 2011 FOMC meeting. That
is, prior to the first increase in the federal funds rate, the Committee
would likely cease reinvesting some or all payments on the securities
holdings in the System Open Market Account (SOMA), and it would likely
begin sales of agency securities from the SOMA sometime after the first
rate increase, aiming to eliminate the SOMA’s holdings of agency
securities over a period of three to five years. Indeed, most
participants saw sales of agency securities starting no earlier than
2015. However, those participants anticipating an earlier increase in
the federal funds rate also called for earlier adjustments to the
balance sheet, and one participant assumed an early end of the maturity
extension program.
** Market News International Washington Bureau: 202-371-2121 **
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