FOMC Minutes: Immediate adjustments to pace, composition of asset purchases not necessary

Minutes of the FOMC's November 4-5 meeting showed on Wednesday that policymakers judged immediate adjustments to the pace and composition of asset purchases were not necessary. However, policymakers further noted that circumstances could shift to warrant such adjustments.

Market reaction

The US Dollar Index showed no immediate reaction to the FOMC Minutes and was last seen losing 0.27% on the day at 91.98.

Key takeaways as summarized by Reuters

"Most policymakers who commented on new proposals for release of the summary of economic projections noted that releasing all SEP materials at the time of the post-meeting statement would provide greater context for the policy decision."

"Policymakers said the role of asset purchases had shifted more to supporting employment, inflation goals."

"Participants generally expected the strength in household spending to continue, especially for durable goods and residential investment."

"Policymakers judged that asset purchases provided insurance against risks that might reemerge in financial markets."

"Several participants expressed concern that, in the absence of additional fiscal support, lower- and moderate-income households might need to reduce their spending sharply when their savings were exhausted."

"A couple of these participants noted reports from their banking contacts that households appeared to be rapidly exhausting funds they received from fiscal relief programs."

"A few policymakers thought asset purchases could guard against upward pressure on longer-term rates."

"Several policymakers noted possibility there may be limits to the amount of additional accommodation that could be provided through increases in asset holdings, expressed concerns on unintended consequences."

"Policymakers noted the Fed could provide more accommodation, if appropriate, by increases in the pace of purchases or shifting to longer maturities."

"Fed could also provide more accommodation, if appropriate, by conducting purchases over a longer horizon."

"A few participants noted that the financing conditions for small businesses were especially worrisome, as the PPP had ended and the prospect for additional fiscal support remained uncertain."

"Several policymakers noted the Fed could maintain the current amount of accommodation by lengthening maturity and reducing the pace of purchases somewhat."

"A few participants noted that climate change poses important challenges to financial stability and welcomed analysis of climate change as both a source of shocks and an underlying vulnerability."

"A few policymakers were concerned that maintaining the pace of MBS purchases could contribute to valuation pressures in housing markets."

"A few participants noted that it was important to extend 13-3 programs beyond year-end."

"Most policymakers thought the Fed should implement outcome-based guidance for asset purchases at some point."

"A few participants were hesitant to make near-term changes to guidance for asset purchases because of uncertainty over the economic outlook."