On Wednesday, the Fed released the minutes of the FOMC’s December meeting.As usual, the minutes followed the standard format, mirroring the way presentations and discussions proceed at FOMC meetings.It began with a brief summary report by the manager of the Open Market Desk in New York.There were only two notable pieces of information in that summary.The first was that market participants attributed the narrowing of spreads between short- and long-term securities to the anticipated continuing rise in the FOMC’s target federal funds rate and the belief that the Treasury would increasingly concentrate its issuance of new securities to the short end of the curve.This would push up short-term rates while increasing upward pressure on longer-term securities’ prices and decreasing longer-term rates.^[1]The second piece of information was simply the confirmation that the reinvestment operations are proceeding on course, but there was no information provided on what changes have taken place in either the size of the portfolio or its composition.

The minutes then continued with separate discussions of staff summaries of real-economy and financial-market conditions leading up to the December meeting.Again, these separate summaries reflect the organizational structure of the Board, whose Division of Research and Statistics focuses mainly on the real economy, while its Division of Monetary Affairs concentrates on financial markets.These discussions were then followed, as is customary, by a summary of the “Staff Economic Outlook,” which this time was quite brief.The main change noted from the previous meeting was the staff’s upward revision of real GDP growth for 2018 as the result of a reassessment of the likely impact of the new tax legislation. Otherwise, aside from a slight uptick in the inflation forecast and a continuation of the decline in the unemployment rate, the staff viewed the risks to the forecasts as relatively balanced and the uncertainties surrounding the forecasts as similar to what they have been over the past 20 years.