December 2012 FOMC Meeting Minutes: Debating Quantitative Easing

Econintersect: The 30 January 2013 meeting statement presented the actions taken. This post covers the economic discussion during this FOMC meeting between the members. The Fed's Balance Sheet (which we report on weekly) is now at record levels. It appears that the FOMC members believed the economy is doing ok - just not great. The most interesting discussion was on the QE programs: ..... many participants also expressed some concerns about potential costs and risks arising from further asset purchases. Several participants discussed the possible complications that additional purchases could cause for the eventual withdrawal of policy accommodation, a few mentioned the prospect of inflationary risks, and some noted that further asset purchases could foster market behavior that could undermine financial stability. Several participants noted that a very large portfolio of long-duration assets would, under certain circumstances, expose the Federal Reserve to significant capital losses when these holdings were unwound, but others pointed to offsetting factors and one noted that losses would not impede the effective operation of monetary policy. A few also raised concerns ...