FOMC Minutes Revealed Reasons For QE3, Discussion On Shifting To Data-Driven Policy The September FOMC minutes gave reasons on the Fed's decision to announce QE3 last month. While little news was delivered, the minutes unveiled that policymakers had a vigorous discussion about shifting from calendar date-based policy targets toward data-driven thresholds. The members also debated on means to reach a consensus economic forecast, the mechanism, upon completion, would replace the current method that each of the 19 members makes forecasts on his own. While the pace and timing of asset purchases remained unknown, it's expected that the QE3 would be continued for at least 2 years until policymakers see improvement in the job market. Read more... Draghi Insists Government Should Determine On Activation Of OMT As expected, the October ECB meeting was a non-event. Policymakers decided to leave interest rates unchanged while little surprise was heard from the press conference. President Draghi also stated that there was no discussion about the cutting the policy rates at the meeting, reinforcing our view that the central bank would leave interest rates unchanged till the year end. The press conference was focused on the OMT and Draghi reiterated the ECB would give no view on bond yields. The ECB would also not purchase Irish or Portuguese bonds until they have regained full market access. The president also indicated that activation of the OMT would be determined by the governments. Many viewed his comments as a call for Spain and the Eurogroup to activate an ESM program. Read more... RBA Lowers Policy Rate To 3.25% After Pausing For Three Months To our surprise, the RBA, after 3 months' of pause, lowered the cash rate by -25 bps to 3.25% as the drop in commodity prices, slowdown in Chinese economy and strength in the Australian dollar weighed on the country's economy. The move was welcomed by Treasurer Wayne Swan who said that 'Australians deserve cost of living relief and today that's what they got'. The AUD weakened against the USD after the announcement. Read more... |
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