Where this gets interesting is that the minutes show a few participants have raised the possibility that it may be appropriate to increase the Fed Funds rate relatively soon. So how soon is relatively soon? It is also worth noting that was not a consensus view. What we would note is that this seems to be a case where the timing of a return to at least somewhat normal interest rates has started to come onto the Fed’s agenda.
What is also becoming clear is that the $10 billion tapering at each meeting is that it is becoming accepted as a normal amount to cut each meeting. If that holds true, then you can expect that the bond buying will end either in late summer or into the latter part of 2014.
Another takeaway is that the Fed is more focused on the good news in the economy than they are in the bad news. That implies that the bias toward a tightening rather than just less easing could start to materialize.
These minutes have had little impact on the markets. As of 2:10 p.m. on Wednesday, equity markets remain directionless.
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