The highly-anticipated minutes of the Federal Open Market Committee’s meeting of 29-30 October were released yesterday at 7 p.m. GMT in Washington impact the U.S. dollar positively in the foreign currency exchange markets as the report appears to confirm inspector speculation that the Fed will taper its $85 billion economic stimulus “in coming months.”
Home and Retail Sales data for October released earlier in the day showed improvement in the U.S. economy for October and the minutes state that the members of the FOMC “generally expected that the data would prove consistent with the committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months.”
Despite the ambiguity of the minutes’ key term “in the coming months,” stock and bonds fell at increased speculation that the Fed’s asset purchasing may slow soon than expected. The Standard & Poor’s 500 Index slid 0.4 percent to 1,781.37, as the profit on 10-year Treasury increased by 0.09 percent to 2.8 percent.
Economists reading the minute have interpreted the extensive discussion of the committee’s members on future guidance as another sing that the Quantitative Easing is drawing closer.
A great part of the minutes also focuses on ways to better clarify their plans for keeping interest rates near zero, but no definitive decision has been recorded.
