The stock market’s relief rally from the last-minute fiscal cliff deal was dampened on Wednesday, January 3 by the release of the minutes from the December 11 – 12, 2012 Federal Open Market Committee (FOMC) meeting.
The minutes showed a divided Fed—almost half and half—over whether the monthly purchases of mortgage bonds should be continued, not a clear majority as the markets believed.
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Since the September meeting, the FOMC minutes have confirmed that the bond-buying would continue until significant improvement was seen in the jobs market.
Opinions on when the buying program should end varied from the end of 2012 to the middle of 2013 to extending it all the way to the end of 2013.
Some want to end the program right away. So the next decision on the matter will be significant for the markets, which would likely experience shockwaves if the program were discontinued.
Fed officials seemed for the most part to be fairly evenly split between those who think the program should end around mid-year and those who think it should continue through to the end.
The Fed stated after its December meeting that it had a target unemployment rate of 6.5% to reach before the bond-buying would end.
But the release of the minutes indicate that the Fed may be considering other factors
as well, such as overall economic growth and labor force participation.