The Fed Board and the FOMC on Wednesday released the attached minutes of the meeting held on August 11-12. The minutes showed Fed officials more confident that the steep downturn in the economy was coming to an end. Still, most officials, according to the release – only expect a slow recovery during the second half of this year and agree the economy is still vulnerable to adverse shocks.
“Conditions in the labor market remained poor, and business contacts generally indicated that firms would be quite cautious in hiring when demand for their products picks up,” the minutes said. “Moreover, declines in employment and weakness in growth of labor compensation meant that income growth was sluggish.”
The minutes also showed officials of the Fed’s policy-setting committee believe it’s beneficial to gradually taper off MBS purchases in order to make the transition easier for financial markets. They generally were of the view that gradually slowing the pace of the purchases of $300 billion of Treasury securities and extending their completion to the end of October could help promote a smooth transition in markets.
In the discussion of economic conditions, the minutes said “consumer spending appeared to be in the process of leveling out, and activity in a number of local housing markets had stabilized or even increased somewhat.”
So far the release is having no market impact. Full Minutes »
The Federal Open Market Committee is scheduled to meet next Sept. 22-23.