The publication, earlier this week, of the Federal Reserve’s Federal Open Market Committee minutes of January 29-30
seemed to have a similar effect on equity markets as a call from room
service to a Las Vegas hotel suite, informing the partying high-rollers
that the hotel might be running out of Cristal Champagne. Around the
world, stocks sold off, and so did gold.
Here is the sentence that caused such consternation:
“However, many participants also expressed some concerns about potential costs and risks arising from further asset purchases (the Fed’s open-ended, $85 billion-a-month debt monetization program called ‘quantitative easing’, DS). Several participants discussed the possible complications that additional purchases could cause for the eventual withdrawal of policy accommodation, a few mentioned the prospect of inflationary risks, and some noted that further asset purchases could foster market behaviour that could undermine financial stability.”
