Fed minutes: Various participants suggested that a complete return to pre-pandemic labor market conditions was unlikely

tweet at 2:04pm: FED MINUTES: PARTICIPANTS EXPRESSED CONCERN THAT INFLATION WILL LAST LONGER THAN PREDICTED, PARTICULARLY IF LABOR AND OTHER SUPPLY SHORTAGES PROVED MORE PERSISTENT THAN CURRENTLY ANTICIPATED. tweet at 2:06pm: 13 Oct - 19:05:58 - FED MINUTES: THE ILLUSTRATIVE PATH ENCOMPASSED MONTHLY REDUCTIONS OF $10 BLN IN TREASURIES AND $5 BLN OF MBS tweet at 2:08pm: FOMC Minutes: - Some individuals felt that the test of substantial further progress toward maximum employment had been passed - Some participants felt that labor supply limits were the key hurdles to continued improvement in labor market conditions tweet at 2:09pm: FED MINUTES: SOME PARTICIPANTS INDICATED THAT THEY WOULD WANT TO PROCEED WITH A MORE FAST MODERATION OF PURCHASES THAN THE ILLUSTRATED SCENARIOS PRESENTED. tweet at 2:08pm: FED MINUTES: MANY PARTICIPANTS NOTED THE SUBSTANTIAL RISE IN ONE- AND THREE-YEAR MEASURES OF INFLATION EXPECTATIONS IN THE NEW YORK FED'S SURVEY OF CONSUMER EXPECTATIONS OR IN THE ONE-YEAR MEASURE IN THE UNIVERSITY OF MICHIGAN SURVEY

The manager turned first to a discussion of financial market developments over the period. Domestic financial conditions were little changed, on net, and remained highly accommodative. The spread of the Delta variant of the COVID-19 virus weighed on the near-term growth outlook and median respondents to the Open Market Desk’s Survey of Primary Dealers marked down projections for gross domestic product (GDP) growth and revised up projections for inflation this year. Nonetheless, expectations for the trajectory of growth beyond 2021 were little changed. Implied forward inflation compensation two to four years ahead based on Treasury Inflation-Protected Securities (TIPS) increased modestly over the intermeeting period. Regarding the outlook for monetary policy, market participants noted policymaker communications suggesting that tapering of asset purchases could begin this year and end by mid-2022. Around half of respondents to the Desk’s surveys of primary dealers and market participants viewed December as the most likely timing of the first reduction in the net pace of purchases, although respondents also attached significant probability to the first reduction coming in November. Median expectations for the pace of net purchases were consistent with a gradual tapering of net purchases being completed in July of next year, about one to two months earlier than in the previous surveys. Expectations for the target federal funds rate based on survey responses and interest rate futures moved up slightly since the previous meeting. Several central banks announced red tweet at 2:02pm: 13 Oct - 19:01:48 - FED MINUTES: VARIOUS PARTICIPANTS STRESSED THAT ECONOMIC CONDITIONS WERE LIKELY TO JUSTIFY KEEPING THE RATE AT OR NEAR ITS LOWER BOUND OVER THE NEXT COUPLE OF YEARS tweet at 2:02pm: FED MINUTES: PARTICIPANTS LARGELY AGREED THAT, AS LONG AS THE ECONOMIC RECOVERY STAYED ON PACE, A GRADUAL TAPERING PROCEDURE ENDING AROUND THE MIDDLE OF NEXT YEAR WOULD BE ACCEPTABLE. tweet at 2:03pm: FED MINUTES: TAPERING COULD BEGIN IN MID-NOVEMBER OR MID-DECEMBER. tweet at 2:03pm: FED MINUTES: SOME OF THESE PARTICIPANTS SAW INFLATION AS LIKELY TO REMAIN ELEVATED IN 2022 WITH RISKS TO THE UPSIDE