Fed Minutes Will Reveal More Details on Monetary Policy Says Pimco

The Federal Reserve held interest rates steady and released a statement on 1 August that made only minor changes to reflect the more upbeat U.S. economy since the Fed’s June meeting. Despite the lack of surprises, however, we don’t think investors should write off the meeting just yet: The more interesting aspect may well come later ‒ when the meeting minutes are revealed in a few weeks.



There is a strong chance that at this meeting the Federal Open Markets Committee (FOMC) began more formal discussions of its longer-term monetary policy implementation framework, specifically whether to continue to implement monetary policy through the “floor” system, which uses the interest that the Fed pays on bank’s excess reserve balances (IOER) to control the fed funds rate. This is important because maintaining the floor system would require the Fed to maintain a bigger balance sheet than it otherwise would have.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza