From Bruce Krasting:
The surprise of the week was not the goofy ending to the cliff. It was the minutes from the Fed.
The meeting in question took place on 12/12, just 23 days ago. Some very major announcements came as a result of that meeting.
A new, and much more aggressive Fed policy was revealed. For the first time ever, the Fed set a target for when monetary policy would change.
The Fed said it would keep its foot on the monetary gas pedal until unemployment fell to 6.5%, and maybe even lower than that. The economic forecasts that the Fed released showed a consensus estimate for unemployment staying above the magic 6.5% until at least 2015. So that set a bar for any changes in monetary policy years into the future.
The Fed backed up its new long-term commitment to boost the economy by doubling up with QE4 – another $45b a month of POMO buys. In December the Fed set the “needle” for monetary steam at the same level that existed during the dark days of 2009. All in, the last Fed meeting was a precedent setting commitment to extended monetary easing. At least that is how I read it.
And then we get the minutes from the meeting where all these dramatic steps were taken. The minutes read completely different. What the hell happened? I have the sense that there was a conversation that might have gone like this…