On Dissent at the Fed
January 28, 2010 by Seeking Alpha
Filed under Investment Ideas
Original Article from Seeking Alpha Editor’s Pick
Tim Duy submits:
The FOMC statement contained a mini-bombshell, the dissent of Kansas City Fed President Thomas Hoenig.
I am skeptical, however, that this dissent is a significant shift in the policy environment. Instead, I view the statement as taking another baby step forward to a normalization of monetary policy now that the financial crisis has eased and that the economic environment has firmed. Many policymakers will simply find themselves increasingly uncomfortable holding rates at rock bottom levels while sitting on a bloated balance sheet – regardless of the unemployment rate. Short of a significant reversal of recent economic gains, I would be hard pressed to see the Fed back away from a policy stance that is growing tighter, albeit slowly tighter.
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