Some FOMC Members Considering QE3 If Economic Growth Too Slow (FOMC Minutes, Dow Chart)

Industrial Average Intraday 7/12/2011
When the June 21-22 FOMC Minutes were released yesterday, the market initially spiked when traders saw the possibility of QE3 ("additional monetary policy stimulus"). I quoted the portion below from page 8 of the released (see below). The market then crashed intraday when Moody's downgraded Ireland to junk (Ba1). More on that in my next post. Quantitative easing during the next bear market will be interesting to watch, when that day comes.

"However, many members saw the outlook for both employment and inflation as unusually uncertain. Against this backdrop, members agreed that it was appropriate to maintain the Committee's current policy stance and accumulate further information regarding the outlook for growth and inflation before deciding on the next policy step. On the one hand, a few members noted that, depending on how economic conditions evolve, the Committee might have to consider providing additional monetary policy stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run. On the other hand, a few members viewed the increase in inflation risks as suggesting that economic conditions might well evolve in a way that would warrant the Committee taking steps to begin removing policy accommodation sooner than currently anticipated." (source: Federal Reserve)

FOMC Minutes 6-22-2011

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