Fed Discount Rate Minutes Show Continued Dissent But Less Confusion
Last week's release of the January FOMC meeting caused confusion due to so many Fed presidents and governors opining on how and when the FOMC might exit the quantitative easing of endless bond buying. Now we have the minutes of another sort, this being from the Federal Reserve's Discount Rate Minutes. While there is still some dissent here, there is far less confusion than in the actual FOMC minutes and the media is likely to overlook today's minutes.
The vote was again 10 to 2 in favor of keeping the discount rate static at 0.75%. The Kansas City Fed voted to raise the discount rate by 0.25% to 1.00% while the Boston Federal Reserve voted to cut the discount rate by 0.25% down to 0.50%. The good news is that this was the same prior recommendation. The bad news is that it shows that there is still not a unification inside the Federal Reserve.
The basic Fed commentary showed that there was a continued economic recovery in the housing market. There was also a modest increase in consumer spending. Still, unemployment remained too high and the current climate of regulatory and fiscal uncertainties were said to be weighing on growth, hiring, and business investment.
As far as the rest, well… in part, who cares? Until you get more dissent inside the FOMC the real direction should not be changed. It is important to remember that the discount rate does not impact the public as much as the Fed Funds rate. The media is not even likely to pay any attention to today's report.
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