Wednesday, October 12, 2011

[FOMC MINUTES ON POLICY DISCUSSION]

The staff presented 3 options for increased monetary accommodation. They were re-investment, maturity...
[FOMC MINUTES ON POLICY DISCUSSION] The staff presented 3 options for increased monetary accommodation. They were re-investment, maturity extension and additional large-scale purchases. Interestingly, the minutes set the discussion of lowering rates on excess reserves apart from other easing methods, and is described as summarizing "the potential implications" - perhaps a suggestion that this option was seen as causing a good bit of trouble if tried. There is also a sense that large-scale asset purchases were seen as the most powerful option, but that meant most likely to lead to inflation. The decision was to hold large-scale purchases in reserve in case conditions worsen. "Operation Twist" was seen by some as possibly impairing market function by reducing the stock of outstanding longer-term Treasuries.

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