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The Fed just released minutes from its market-moving meeting



Federal Reserve officials discussed at their meeting three weeks ago ending the reduction of bonds on the central bank's balance sheet before the end of 2019, according to minutes released Wednesday.

7 by allowing a capped level of proceeds to roll out every month, and officials have been trying to ensure markets that the process should go smoothly.

However, investors have gotten nervous that the Fed would allow the reduction to continue even if financial conditions were tightened. The report from the minutes echoes recent comments from several Fed officials that the program will probably end before the end of the year as bank reserves fall to a level with which regulators and financial institutions feel comfortable.

On related issue, Fed Also judged that a "patient" approach to interest rate hikes would be prudent as it continued to weigh different headwinds to growth.

"Participants pointed to a variety of considerations that supported a patient approach to monetary policy at this juncture as appropriate step in managing various risks and uncertainties in the outlook, "the meeting said.

Among the considerations were the recent softness in inflation, the shutdown of the government and the fiscal policy path. Officials also weighed on the impact that Fed policy tightening moves as well as ongoing trade negotiations between the U.S.

Members added that keeping the federal funds rate in the target range of 2.25 percent to 2.5 percent "posed little risk at this point." In the past, officials have been worried that keeping rates low for too long would spur inflation and force the Fed to tighten more quickly than it would like.

However, the Fed left a few wiggle room.

Federal Open Market Committee

Market reactions to Fed actions seemed to take up a good part of the conversation.

Participants noted the market belief that the balance sheet reduction has contributed to the volatility of the late 2018 market, and noted that investors interpreted communications from the December meeting as "not fully appreciating the tightening of financial conditions and the associated downside risks to the US economic outlook that has emerged since the fall." [19659003] This is a developing story. Check back here for updates .


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