The release of the minutes from the January 24-25 Federal Reserve meeting on Wednesday was one of the most anticipated ever. The wait proved worthwhile as the minutes went beyond just providing additional information on historic Fed decisions. They also shed light on the future of its balance sheet operations and some of the challenges that its unusual policy activism faces in this fluid economic and political environment.
You should have no doubt. The Fed remains one of the most activist, imaginative and courageous central banks in the world. Motivated by the uncertain economic outlook and the reticence of other policymakers who are much better placed to remove impediments to growth and job creation, it feels compelled to do even more to boost the US economy. Yet the its ability to deliver good outcomes is tempered by the fact that it is experimenting, deploying untested tools with inadequate support from other policymakers.
The bad news is that we will not know for a while whether the Fed’s unusual activism will work. However, when the time finally comes – and here is the good news – historians will have an unusual amount of information to understand the content in which innovations and important decisions were made.