Minutes of the Federal Open Market Committee (FOMC)
held in January show a broad support for tapering. Only a few
members had concerns about dialing back monthly asset purchases.
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Here is what these minutes revealed about some important issues:
Many participants believed that the Committee's decision to start
tapering in December had not resulted in an adverse market
On Forward Guidance and Raising Rates
FOMC members agreed that with the unemployment rate approaching
6.5%, it would soon be appropriate for them to change their
They had earlier said that the Fed funds rate would stay at near
zero levels until the unemployment rate reaches 6.5%, as long as
inflation remains below 2%..
A few participants even raised the possibility that it might be
appropriate to increase the federal funds rate relatively
On Emerging Markets
The committee observed that recent volatility in emerging markets
appeared to have had only a limited effect to date on U.S.
In her first appearance before the congress, the new Fed
chairperson Janet Yellen said that the "Fed was watching closely
the recent volatility" but "these developments do not pose a
substantial risk to the US economic outlook".
This issue of impact of tapering on emerging markets is likely to
front and center in the G20 meeting in Australia this weekend.
Many emerging nations' central banks have complained about
tapering. India's central bank governor said that "international
monetary co-operation had broken down".
Since there was nothing new in minutes, my RTI question relates
to Fed's policy on emerging markets.
Do you think the Fed is right in ignoring emerging