Fed Becomes Bearish On Quantitative Easing (QE)

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In a surprise to Wall Street, minutes from the Fed’s December policy meeting, published on Thursday, showed a growing reticence about further increases in the central bank’s $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009.

“Several (officials) thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet,” the minutes said, referring to the narrower group of voting Fed members.

 QE “HEEBIE-JEEBIES”

The U.S. economy expanded a respectable 3.1 percent in the third quarter on an annualized basis, but growth is believed to have slowed sharply to barely above 1.0 percent in the last three months of the year.

Data on Thursday showed a solid gain of 215,000 new private sector jobs for December, while analysts polled by Reuters last week were looking for a rise of 150,000 new jobs in the Labor Department’s official survey, due out on Friday.

Still, the minutes indicated worries about quantitative easing policies were spreading beyond the usual regional Fed hawks who, like Richmond Fed President Jeffrey Lacker, have opposed additional Fed easing.

“What’s clear from these minutes is that there is little consensus among the members of the FOMC on how long asset purchases should carry on,” said Jason Conibear, trading director at Cambridge Mercantile.

Entire Story On Reuters.

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