Author Topic: Fed officials split on the timing of shrinking $4.5 trillion balance sheet.  (Read 608 times)

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Offline Free Vulcan

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Federal Reserve officials are split about the timing for shrinking the central bank's $4.5 trillion balance sheet, notes from their June meeting released Wednesday suggested.

The officials at the meeting expressed "a range of views" about when to begin allowing the Fed's holdings of Treasury securities and government-backed mortgage securities to mature without replacing them, according to the minutes.

Some favored such a move within "months." That shortened timeline would amount to a more aggressive effort by the Fed to raise the cost of borrowing and slow economy-wide spending to stave off potential inflation. Other officials were reluctant to send such a message, however.

Wednesday's minutes were taken at the June 14 and 15 meeting of Fed officials in Washington, at which they first voted in favor of starting to shrink the central bank's swollen balance sheet later this year. The names of individuals are not given in the minutes.

The minutes also revealed that "most" Fed officials were not worried by the apparent slowdown of inflation in recent statistics. Instead, they chalk up the low inflation figures to "idiosyncratic" factors that are not likely to prove indicative of the health of the economy or future inflation. Chief among those one-off factors is the bidding war among cell phone providers to offer unlimited data plans, which has led to a sharp drop in wireless prices.

Read more at: http://www.washingtonexaminer.com/fed-officials-split-on-the-timing-of-shrinking-45-trillion-balance-sheet/article/2627811
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