At the end of the day, the doves rule the roost at the Fed, but expect to hear more hawkishness from behind the scenes in Wednesday’s release of the Fed meeting minutes.
There’s an especially high level of interest in the minutes from January’s Federal Open Market Committee meeting, after the December minutes rocked the markets. Those minutes, released January 2, noted that several FOMC members wanted to see quantitative easing stopped or slowed by the end of this year, earlier than expected. Even though unlikely, that comment helped drive up interest rates, and the 10-year note has held at a slightly higher level around 2 percent since then.
Under its quantitative easing program, the Fed is purchasing $85 billion in Treasurys and mortgage securities each month, in an effort to drive rates lower and keep mortgage rates low. The Fed said “almost all” members at that December meeting thought the asset purchase program that started in September was effective and supports growth, but they were concerned about the benefits versus the costs of ongoing purchases.