Fed Releases Minutes Early to Staffers and Top Banks

Written by Allen Lee ’16

ben_bernanke--300x300The Federal Reserve accidentally emailed minutes of the March 20-21 meeting almost a day early, revealing the discussions among Fed officials to top Wall Street banks including Citigroup, Goldman Sachs, and J.P Morgan Chase. The central bank blames the early release on “human error” rather than a technological mistake.

Instead of releasing the minutes on Wednesday at the regularly scheduled time, the Fed released the minutes at 2 p.m. on Tuesday, almost a day early. Officials did not notice the mistake until 6:30 a.m. Wednesday. Similarly, a number of recipients claim they hadn’t noticed the early release until after the Federal Reserve discovered the error.

The minutes included a wealth of opinions of the Federal Reserve on their quantitative easing policy that includes buying $45 billion in Treasuries and $40 billion in mortgage-backed securities each month. The Fed showed no general consensus on the efficacy of the policy but the minutes did indicate that officials were waiting for better data.

Many economists still believe the Fed will gradually decrease its asset purchases into the second half of this year and end them completely by early 2014.
But as of now, the Fed plans to continue to this $85 million-a-month bond-buying program until unemployment falls below 6.5% or inflation exceeds 2.5%.

The timetable for this policy is still dependent on market outlook. If there is a slump in market data, then the policy will last for a longer time. The meeting occurred before the dismal March nonfarm payroll and labor market data were released, suggesting that the opinions contained in these minutes are subject to change.

Firms and other market participants rely on these minutes for insight on Fed bond-buying and interest rate policy. For that reason, these minutes are highly protected by the central bank and the release is planned carefully.

As of now there is no clear indication whether any trading took place based on the early release. Although it is unlikely that there is connection to insider trading, the Federal Reserve Board’s Inspector General along with the SEC and CFTC will conduct an investigation.






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