Attn: Speed Readers – FOMC Minutes Out

For anyone interested in micro managing what a bunch of people who know no more than you and me about coming policy had to say about coming policy, here’s the big event…Minutes of the Federal Open Market Committee

Can’t wait for the MSM to burp up all the particulars that we are supposed to get worked up about.

Well, this bit picked out by some speed readers is interesting…

On whether to sell assets to reduce usage of overnight reverse repurchase agreement operations: “Many participants mentioned that selling assets that will mature in a relatively short time could be considered at some stage, if necessary to reduce ON RRP usage. However, a number of participants noted that it could be difficult to communicate the reason for such sales to the public, and, in particular, that the announcement of such sales would risk an outsized market reaction, as the public could view the sales as a signal of a tighter overall stance of monetary policy than they had anticipated or as an indication that the Committee might be more willing than had been thought to sell longer-term assets. Some participants pointed out that an earlier end to reinvestments of principal on maturing or prepaying securities would help reduce the level of reserve balances, thereby increasing the effectiveness of the IOER rate and allowing a more rapid reduction in the size of the ON RRP facility. A number of participants suggested that it would be useful to consider specific plans for these and other details of policy normalization under a range of post-liftoff scenarios.”

 

Yes gold bugs, you read that right.  Some members seem to be conspiring to bring back Operation Twist, Part II (subtitled ‘The Final Annihilation‘).

Are you kidding me?  They would sell short-term assets to give the impression of tightening?  Well, if ZIRP is repealed decisively at the same time that could be so.  But they will not decisively repeal ZIRP.  At best, they might go in agonizingly slow 1/4 point increments, if they go at all.  Meanwhile, by driving up short-term yields (selling short-term assets) they’d stand ready once again to “sanitize” inflation signals.  As for the b/s about the public viewing them as “more than willing” to sell long-term bonds?  Well, ha ha ha… that’s a good one.