8/31/2011 - Optimism in the Minutes

Free Exchange
Link: Optimism in the Minutes

"THE Federal Reserve released the minutes of its August meeting today, and they make for very interesting reading. Members of the Federal Open Market Committee have developed a much more pessimistic view of the American economy; that much was already clear from the most recent Fed statement. And there is disagreement within the Fed on what ought to be done; that much was also clear. What is interesting about the minutes is that it seems to show that most of the disagreement within the FOMC concerns how to act rather than whether to act. Obviously, there were three dissenters to the last statement. There is little hint of broad sympathy for their position in these minutes, however. Rather, there is a sense that more discussion of the next policy step is needed. Hence the FOMC opted for a mild easing step now and a longer September meeting to hash things out." (For related content, see A Dispirited Fed Chairman Emerges at Jackson Hole.)