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Fed Minutes Reveal Debate on Tapering

Abhijit Ghosh

The  minutes of the Federal Open Market Committee (:FOMC) meeting held on June 18--19 show that the committee remained divided on the timing for QE3 tapering.

“Many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases.”

“However, several members judged that a reduction in asset purchases would likely soon be warranted, in light of the cumulative decline in unemployment since the September meeting and ongoing increases in private payrolls.”

The members agreed to keep the fed funds rate at ultra-low levels.

Per FT:, In the jargon of Fedspeak, “several” is likely to mean three out of the 12 voting members of the FOMC, while “many” would cover most of the other nine. That suggests a clear majority on the committee who want more data before tapering.

Stocks are now very close to their all-time high reached in late May. While ‘tapering’ concerns had led to a strong reaction initially, the market seemed to be preparing for the post-QE world in the past couple of weeks.

Do you think that minutes could further confuse the market and result in higher market volatility?

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