In terms of the economic development there was not much new in the FOMC minutes, as the FOMC members have already been quite outspoken since the meeting.
However, as Yellen said at the press conference following the meeting, the FOMC participants discussed when to change the current reinvestment strategy (which states that the Fed will continue to reinvest principal payments until the normalisation of the Fed funds rate is 'well under way' ).
The minutes say that 'a change to the Committees reinvestment policy would likely be appropriate later this year' .
We expect the Fed to begin shrinking its balance sheet in Q1 18 (what we call quantitative tightening) while consensus among both primary dealers and analysts is mid-18. We think an announcement is likely in connection with the June meeting. The FOMC members still want quantitative tightening to be 'conducted in a passive and predictable manner' .
The minutes suggest quantitative tightening would likely depend on the Fed funds target range or the level of an economic variable (possibly the PCE inflation rate or the unemployment rate, as it was the case with the Evans rule).
The minutes indicate that the FOMC members 'generally preferred to phase out or cease reinvestments of both Treasury securities and agency MBS' .
Also interesting, the Fed staff still expects the Trump administration to ease fiscal policy but has 'pushed back the timing of when those policy changes were anticipated to take effect'
To read the entire report Please click on the pdf File Below