The new dovish minority at the Fed
Suddenly, it’s the two lone doves who find themselves on the outside of the Federal Reserve’s policy consensus. Until recently, it was the hawks who were in the minority. But minutes of the central bank’s March meeting suggest policymakers are becoming less keen to launch a fresh round of monetary stimulus as the U.S. economy improves.
They key difference came from the minutes’ characterization of officials’ inclinations toward a third round of quantitative easing or QE3.
Here is what the January minutes had said:
A few members observed that, in their judgment, current and prospective economic conditions – including elevated unemployment and inflation at or below the Committee’s objective – could warrant the initiation of additional securities purchases before long. Other members indicated that such policy action could become necessary if the economy lost momentum or if inflation seemed likely to remain below its mandate-consistent rate of 2 percent over the medium run.
Contrast that with March’s thinning ranks of QE3 proponents.
A couple of members indicated that the initiation of additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below its mandate-consistent rate of 2 percent over the medium run.