Decoding Wall St.: What did the FOMC minutes REALLY Say?

So what did those news-making FOMC minutes REALLY say? We decode it below.

FOMC says:

“Economic conditions could warrant the initiation of additional securities purchases before long.”

• Decoded: The Federal Reserve (sound smart: the Fed) has not been buying bonds lately, taking a breather if you will. But, the process is being discussed due to less than robust economic conditions, which is on full display in an 8% plus unemployment rate.

FOMC says:

“Other members indicated that such a policy could become necessary if the economy lost momentum or if inflation seemed likely to remain below 2% in the medium-term.”

• Decoded: This is where the Fed “sets market expectations”, or the dropping of a line to the public that hints at its actions should an economic event happen in present day (here it’s if the economy loses momentum).

FOMC says:

“Most participants saw sales of agency securities starting no earlier than 2015.”

• Decoded: The Fed buys bonds and holds them like we would a savings bond given to us from grandma. Unlike our birthday gift, however, the Fed has to decide when to sell its bonds (sound smart: agency securities) to raise money for its own personal savings account. The selling of bonds (sound smart: a security) would be known as a process called “tightening of monetary policy” as it removes money from the hands of banks, which is the one buying the Fed’s bonds.

FOMC says:

“A few participant’s noted that the decline in the unemployment rate reflected a declining labor force participation rate.”

•Decoded: An unemployment rate declines for two reasons. First, more people work and no longer collect unemployment checks. Second, people run out of unemployment benefits and drop out of the labor force, causing a decline in the “participation rate.” No work, no income, no good, and this is something that causes the Fed to spring into action.