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The minutes show that the decision to maintain stimulus was a close run thing, as St Louis Fed President James Bullard had previously indicated.
Because of recent soft economic data, some of the committee wanted to see more evidence to confirm that continued improvement would be attained.
Others were wary that a reduction was widely expected, and failure to do so might create concerns over the value of FOMC communications.
As a consequence, the Fed’s statement says that ‘For several members, the various considerations made the decision to maintain an unchanged pace of asset purchases at this meeting a relatively close call.’
The minutes didn’t contain anything too surprising, but they do show that the Fed is concerned about scaling back its asset purchases too soon.
Despite the evidence that the September decision was very close to being a taper, I do not think it follows that a reduction in October is a shoo-in. We are yet to see any resolution to the shutdown or the debt-ceiling debate, and so there is a great deal of uncertainty there, but even with a quick resolution, I think the Fed would not be in a position to ascertain how adversely these events have affected the US economy by the time of the next FOMC meeting (which begins on 29 October).
The stock market did not react strongly to the release of the minutes, and by late in the New York trading session, the Dow was up 0.40% or 59 points at 14,835, while the S&P 500 stood at 1661.0, up 0.33%. The NASDAQ 100, which was down substantially earlier in the day, recovered to almost flat.