November 2–3 · Published November 23, 2010
Statement·Presser·Minutes
BBBen S. BernankeNovember 2–3, 2010 FOMC Minutes
Our reading
The minutes read consistent with the statement because both documents reflect the same key decisions and rationale: the FOMC agreed to expand its securities holdings by purchasing an additional $600 billion in longer-term Treasury securities, maintained the federal funds rate target range at 0 to 1/4 percent, and emphasized that progress toward the dual mandate of maximum employment and price stability has been disappointingly slow, with the statement and minutes aligning on the need for additional monetary stimulus to support the recovery and ensure inflation returns to levels consistent with the mandate.
Our reading compares the minutes of the November 2–3 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- Ben S. Bernanke
- James B. Bullard
- William C. Dudley
- Elizabeth A. Duke
- Thomas M. Hoenig ↑ dissented
- Mr. Hoenig dissented because he judged that additional accommodation would do little to accelerate the economy's continuing, gradual recovery. In his assessment, the risks of additional purchases of Treasury securities outweighed the benefits. Mr. Hoenig believed that additional purchases would risk a further misallocation of resources and future financial imbalances that could destabilize the economy. He also saw a potential for additional purchases to undermine the Federal Reserve's independence and cause long-term inflation expectations to rise. Mr. Hoenig also believed it was not appropriate to indicate that economic and financial conditions were "likely to warrant exceptionally low levels of the federal funds rate for an extended period" or to reinvest principal payments from agency debt and mortgage-backed securities in long-term Treasury securities. In his assessment, this continued high level of monetary policy accommodation could put at risk the achievement of the Committee's long-run policy objectives.
- Sandra Pianalto
- Sarah Bloom Raskin
- Eric S. Rosengren
- Daniel K. Tarullo
- Kevin Warsh
- Janet L. Yellen
From the minutes
FOMC minutes
Voting for this action: Ben Bernanke, William C. Dudley, James Bullard, Elizabeth Duke, Sandra Pianalto, Sarah Bloom Raskin, Eric Rosengren, Daniel K. Tarullo, Kevin Warsh, and Janet L. Yellen.
Voting against this action: Thomas M. Hoenig.
Mr. Hoenig dissented because he judged that additional accommodation would do little to accelerate the economy's continuing, gradual recovery. In his assessment, the risks of additional purchases of Treasury securities outweighed the benefits. Mr. Hoenig believed that additional purchases would risk a further misallocation of resources and future financial imbalances that could destabilize the economy. He also saw a potential for additional purchases to undermine the Federal Reserve's independence and cause long-term inflation expectations to rise. Mr. Hoenig also believed it was not appropriate to indicate that economic and financial conditions were "likely to warrant exceptionally low levels of the federal funds rate for an extended period" or to reinvest principal payments from agency debt and mortgage-backed securities in long-term Treasury securities. In his assessment, this continued high level of monetary policy accommodation could put at risk the achievement of the Committee's long-run policy objectives.
It was agreed that the next meeting of the Committee would be held on Tuesday, December 14, 2010. The meeting adjourned at 1:15 p.m. on November 3, 2010.
What changed from the previous meeting’s minutes
- FOMC announced $600 billion in additional longer-term Treasury purchases, targeting total SOMA holdings of $2.6 trillion by June 2011.
- Minutes cited inflation compensation rising to recent-year typical levels, whereas previous minutes noted TIPS-based inflation compensation declining.
- Unemployment rate described as "elevated" relative to mandate-consistent levels, with progress deemed "disappointingly slow."
- One member (Thomas M. Hoenig) dissented, same as prior meeting, but now citing risks of balance sheet expansion and inflation expectations.
- Committee expanded securities purchases, replacing prior policy of only reinvesting principal payments.
Summary generated automatically from the two documents.