Today, the Federal Reserve released its minutes from its last Federal Open Market Committee (FOMC) meeting on Jan. 25-26. Immediately after the release, both the S&P 500 and Nasdaq-100 accelerated higher, with both indices closing near an intraday high. The minutes show that the Fed discussed interest rate hikes, tightening monetary policy, and a balance sheet reduction. As of now, the Fed is indicating that it could hike interest rates as soon as the next FOMC meeting on March 15-16.
Another hot topic that officials discussed was the reduction of the near-$9 trillion federal balance sheet. The balance sheet largely consists of Treasury bonds that were purchased in an attempt to drive down rates and stimulate growth. CNBC reports that to do this, many Fed officials want to allow proceeds from maturing bonds to roll off. Other Fed officials have suggested selling mortgage-backed securities in an attempt to only hold Treasury bonds on the balance sheet.
Before reducing its balance sheet, many investors expect the Fed to officially wind down its asset purchase program. During the January meeting, the Fed also outlined a plan in which the bank will buy more Treasury bonds and mortgage-backed securities over the next month.
So, what else should investors know about the minutes from the FOMC meeting? Let’s jump right in.
7 Big Takeaways From the FOMC Minutes
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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