The main short-term policy message from the “Operation Twist” Fed minutes is that all options remain on the table and two FOMC members would have supported still further easing.

Beyond that, the minutes offer some intriguing insights into the Fed’s debate about communication policy. They show how that debate is running up against the biggest division on the committee: between those who think the structural rate of unemployment has risen sharply and the majority who believe that it has not.

Going through the communications policy paragraphs:

Most participants indicated that they favoured taking steps to increase further the transparency of monetary policy, including providing more information about the Committee’s longer-run policy objectives and about the factors that influence the Committee’s policy decisions. Participants generally agreed that a clear statement of the Committee’s longer-run policy objectives could be helpful; some noted that it would also be useful to clarify the linkage between these longer-run objectives and the Committee’s approach to setting the stance of monetary policy in the short and medium run.

It’s not actually clear whether we have moved closer to an explicit inflation objective. We know that a large majority of the FOMC support this — but ‘most’ still suggests an opposing minority. Read more