The September Minutes from the FOMC are out and the tone is getting far less cautious and far less negative, despite all the caveats. It also shows that there is some disagreement among members about the size of MBS purchases as well as differing views of inflation. There is a notion that the overall economic outlook improved. As far as asset purchases, members stressed the importance of maintaining flexibility to expand the asset purchases if the economy started to roll back over and the members wanted the flexibility to shrink the repurchases or to scale the programs down if conditions keep improving or improve faster than expected.
The key caveat here is that there is still some skepticism on the part of the FOMC. They are just not sure about the size of the recovery. While that is always the case coming out of every recession, this recession was far deeper and it is easy to see how many policy makers are not sure. The growth is still thought of as restrained.
The worst notion here from the FOMC is that the they are not looking for 9 1/4% by the end of 2010 but not anything under 8% unemployment before the end of 2011. In short, this is going to probably very much of a jobless recovery.
The full minutes from the FOMC are here.
JON C. OGG