By Steven K. Beckner
The minutes reveal that “a few members worried that reinvesting
principal from agency debt and MBS in Treasury securities could send an
inappropriate signal to investors about the Committee’s readiness to
resume large-scale asset purchases.”
“Another member argued that reinvesting repayments of principal
from agency debt and MBS, thereby postponing a reduction in the size of
the Federal Reserve’s balance sheet, was likely to complicate the
eventual exit from the period of exceptionally accommodative monetary
policy and could have adverse macroeconomic consequences in future
years.”
While talking about the eventual need to shrink the balance sheet,
there was also discussion about the possible need to expand it further.
“Several members emphasized that in addition to continuing to
develop and test instruments to facilitate an eventual exit from the
period of unusually accommodative monetary policy, the Committee would
need to consider steps it could take to provide additional policy
stimulus if the outlook were to weaken appreciably further.”
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** Market News International **
[TOPICS: M$$CR$,M$U$$$,MMUFE$,MGU$$$,MFU$$$,M$$BR$]
