Fed minutes show solidarity on QE
Weekly Cash Commentary.
A week into the new year and we already must look back at 2020. Blame the Federal Reserve. It released the minutes of its December Federal Open Market Committee (FOMC) meeting, which showed that it was even more quiet than we thought. With no appetite for raising the fed funds rate, FOMC members spent most of their time talking about the amount of Fed asset purchases. Not surprisingly, given the statement from that meeting, they all agreed to keep the monthly pace (as it often is called) of purchases at the current level of at least $120 billion per month. That is, until the economy exhibits substantial further progress. A notable line from the minutes was that, “A couple of participants indicated that they were open to weighting purchases of Treasury securities toward longer maturities.” This could mean less buying at the front end of the Treasury yield curve, but that is not certain.