We made the case on July 30 the Fed’s desire to taper is about bubble management rather than confidence in the economy. Hard evidence aligning with a “the Fed is still concerned about the economy” stance was included in the most recently released Fed minutes:
Participants also discussed a range of possible actions that could be considered if the Committee wished to signal its intention to keep short-term rates low or reinforce the forward guidance on the federal funds rate. For example, most participants thought that a reduction by the Board of Governors in the interest rate paid on excess reserves could be worth considering at some stage.
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