The minutes of the latest FOMC meeting were published today. The minutes didn’t present too much added value information that wasn’t covered in the statement of the FOMC meeting and the press conference that followed. But the market is reacting to this news as gold and silver prices are up and USD is falling against the Euro. The FOMC members agreed that the Fed should make it clearer regarding its monetary policy in the coming meetings. Most members still think that the asset purchase program is still required considering the current economic activity:
“…all members but one judged that the outlook for economic activity and inflation warranted the continuation of the Committee’s current highly accommodative stance of monetary policy in order to foster a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
The situation isn’t clear regarding how many FOMC members think the FOMC should start to scale down its current asset purchase program. Only several members think that The FOMC should taper QE3 in the near future:
“However, several members judged that a reduction in asset purchases would likely soon be warranted, in light of the cumulative decline in unemployment since the September meeting and ongoing increases in private payrolls, which had increased their confidence in the outlook for sustained improvement in labor market conditions. Two of these members also indicated that the Committee should begin curtailing its purchases relatively soon in order to prevent the potential negative consequences of the program from exceeding its anticipated benefits.”
Nonetheless, the forex and precious metals markets are reacting to this news as the US dollar is tumbling down against leading currencies including Euro: The Euro USD is up by more than 0.84% to reach 1.2888. The price of gold continues its upward trend and is up by 0.91% to $1,257. Silver price is up by 0.82% to $19.30.
Today, Bernanke also gave a speech at a conference. The title of the speech is A Century of U.S. Central Banking: Goals, Frameworks, Accountability.
In the press conference that followed Bernanke answered questions on the Fed’s monetary policy including the Fed’s tapering.As oppose to his previous press conference following the FOMC statement, this time he was more dovish and suggested the economy still has a long way to go and will require more easing. This dovish tone was enough to send the USD down and precious metals prices up.
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