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Fed Update: Summary of Minutes from April 26-27 Meeting

May 18, 2011

by The TopStock Team

Headline Alert

Fed Update: Summary of Minutes from April 26-27 Meeting

Here are some highlights from the April 26-27 FOMC meeting:

The information reviewed at the April 26-27 meeting suggested that there was a discussion of ‘normalization’, though the Fed said that the discussion did not indicate a move toward normalization would begin any time soon.
The Fed agreed on several principles that would direct the strategy for normalization, though no decision regarding such strategy was made at the meeting:
The pace of the policy steps would be driven by the Fed’s dual mandate of maximum employment and price stability.
The size of the System Open Market Account (SOMA) would be cut down over an intermediate term to match monetary policy through the fed funds rate rather than through the Fed’s balance sheet.
Returning the SOMA to holding only Treasuries would be part of an intermediate term exit strategy.
Asset sales would be completed at a pace flexible to changes in economic / financial conditions, and through a framework communicated to the public in advance.
The FOMC members also agreed that changing the target of the fed funds rate would be the appropriate tool for tightening monetary policy when the time comes.

The Fed said that the economic recovery is proceeding at a moderate pace, the labor market is gradually improving, and that there would be no change to its QE2 policy or fed funds rate target.

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