US DATA: Aug 1 FOMC mins show continued worries about labor mkt and
a desire to evaluate OT-2, but also disclose this increased reaction
function: “Many members judged that add’l monetary accommodation would
likely be warranted fairly soon unless incoming information pointed to a
substantial and sustainable (econ) strengthening.” On stimulus tools:
1-extension of low rate pd: many favor & will revisit in Sept, “might be
particularly effective if done in conjunction with indicating a highly
accommodative stance was likely to be maintained even as recovery
progressed”; 2-asset buys: Many said buys “could provide additional
support for recovery both by putting downward pressure on longer-term
int rates and by contributing to easier financial conditions more
broadly.” Some said a new buy program might boost business/consumer
confidence. Discussed buy Tsys vs MBS, as staff analysis shows both have
“substantial capacity for additional purchases without disrupting mkt.”
Many said new buys “should be sufficiently flexible to allow adjustmts.”
3-IOER, Req reserve changes had lesser discussion-indicates less likely.