Fed bombs March’13 minutes

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The FOMC bombed the release of the March 19/20 meeting minutes (accidentally releasing at 2pm Tuesday NY time to a subset of subscribers) and as a result had to release them early to the market, at 9am NY time.

By the time the early release was announced, the price action told you 1/ that they were in the market, and 2/ that they were ‘hawkish’. Sure enough, they were hawkish.

Now this is before the soft NFP report — though it wasn’t a total mess and at least Williams wasn’t perturbed by the data — but it is a surprise to me (and the market) nonetheless. Few though the fed might taper in Q3.

The WSJ’S Hilsenrath, as usual, has his finger on the pulse:

Federal Reserve officials actively engaged in a debate about whether to begin winding down an $85 billion per month bond-buying program after midyear, minutes of the Fed’s last policy meeting show.

The minutes … showed that “all but a few” Fed officials agreed at the central bank’s last policy meeting that they wanted to keep the program going “at least through midyear.” But after that, officials had a wide range of views about how they might proceed.

Some at the March meeting felt the Fed would be able to begin tapering the program down around midyear. Others saw the Fed continuing through September before tapering down, and a few wanted to keep the program going at its current pace through 2013 and into 2014. Some also held out the possibility of increasing the program if the economic outlook deteriorates.

“Several participants emphasized that the asset purchase program was effective in supporting the economic expansion, that the benefits continued to exceed the costs, and that additional purchases would be necessary to achieve a substantial improvement in the outlook for the labor market,” the minutes showed.

“In contrast, a couple of participants indicated that the Committee could best foster its dual objectives and limit the potential costs of the program by beginning to taper its purchases before midyear or by ending purchases altogether,” the minutes said.

The key bit is that ‘only a few’ wanted to keep the program going at its current pace through 2013 and into 2014.

Update (11 April) — the WSJ reports that the minutes went to banks.

The central bank released a list of about 150 email addresses to which the early minutes release was sent Tuesday afternoon. The list shows that the minutes were sent to officials at numerous big banks including J.P. Morgan Chase, The Goldman Sachs Group Inc., Nomura Holding Inc. and Citigroup Inc., among others.

Earlier in the day, the Fed said the minutes went to trade groups around Washington, D.C., but the list shows that many of the recipients were located at individual banks. The email also went to officials at a handful of trade associations including The Clearinghouse, which represents large commercial banks, and the American Bankers Association.


  1. More QE would be quite depressing, slowing down purchases would be quite good, actually a sign that the economy is finally improving. Wishful thinking?

    1. What should come first – the economic improvement or the policy tightening, that is the question.

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