"Spring forward" is the mnemonic for setting clocks for Daylight Saving time. It is also a description of what happened with early release of the Federal Reserve's March meeting minutes. Instead of the usual 2 p.m. Eastern release time, the central bank went public with the minutes five hours early Wednesday.
In a statement, a Fed spokesperson said the information had accidently been distributed selectively a day earlier. "The reason is they were inadvertently sent early to a list of individuals who normally receive the minutes by email shortly after their usual release time," the statement read. "The individuals on the distribution list -- primarily congressional employees and employees of trade organizations -- received the minutes shortly after 2 p.m. Tuesday."
Why the minutes matter
The minutes are mined for indicators of when the central bank might begin to wind down extraordinary measures intended to boost growth. The clues are viewed along with public comments made by Chairman Ben Bernanke, Vice Chair Janet Yellen and other officials. The Fed's actions are widely credited for helping to fuel the recent stock market rally and a burgeoning recovery in the housing market, even as unemployment remains high.
There has also been increasing criticism that the measures may be igniting bubbles that could come back to harm the economy. Fed officials have said they're keeping an eye on that, but that they don't see anything to cause alarm or an immediate end to record-low interest rates.
End to asset purchases?
The minutes note that the Fed surveyed Treasury bond dealers and found that, before the March meeting, most of the dealers "continued to view the third quarter of 2015 as the most likely time of the first increase in the target federal funds rate." That indicates from the vantage point of the marketplace, a boost in benchmark interest rates is still at least two years away.
The minutes also refers to market expectations suggesting that the Fed could end its program of $85 billion in monthly asset purchases in the first quarter of 2014. Those same market players were said to believe the purchases should begin to wind down before that point. Fed officials have said that they expect to maintain the size of the central bank's balance sheet for some time, even after purchases subside.
Among the central bankers themselves, the debate appears to be getting more serious about when to wind down the asset purchases. The minutes put it this way: "A few participants noted that they already viewed the costs as likely outweighing the benefits and so would like to bring the program to a close relatively soon. A few others saw the risks as increasing fairly quickly with the size of the Federal Reserve's balance sheet and judged that the pace of purchases would likely need to be reduced before long."
The official policy statement released after the meeting repeated that low rates "will be appropriate at least as long as the unemployment rate remains above 6.5 percent." The Fed also wants to keep inflation contained.
Amid the considerable public debate about the real-world impact of the sequester -- the mandatory cuts in federal spending that took effect March 1 -- some FOMC officials seemed to take a more relaxed view. The minutes said that while officials "judged that recent tax and spending changes were already restraining aggregate demand or would do so over the course of the year." But a couple of them were described as having already "cut their estimates of the effect of recent federal austerity measures or had never considered the effects to be substantial."
More risk please?
What about the possible other side-effects of low interest rates and continued asset purchases? Open Market Committee members commented that additional risk is being taken by "investors in some financial markets." That was said to be in the form of "either credit risk or interest rate risk."
"As a result," the minutes continue, "vigilance on the part of policymakers and regulators was warranted, especially in light of episodic strains in European markets." That seems to be their way of saying they'll continue to pay close attention.
Those taking part in the meeting are the seven members of the Fed Board of Governors and the presidents of the 12 Federal Reserve Banks. The next scheduled meeting is April 30 and May 1.
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