Concerned about upside risks to inflation, a number of hawks at the FOMC meeting earlier this month were willing to begin tapering down asset purchases as early as June with one hawk calling for an immediate tapering.
But the hawks were outnumbered as the doves called for more progress on the economy before slowing the pace of asset purchases. The doves argued that the nation's recovery, which started strong, was beginning to slow, with one dove arguing that more accommodation, not less, was needed. Most members at the meeting were willing to make adjustments to purchases, whether up or down, based on the jobs market and inflation.
Pointing to rising issuance of lower quality bonds, hawks voiced concern that US financial markets were becoming too buoyant. Comments were also heard that the Fed, as part of its quantitative easing effort, should begin moving to Treasury purchases and away from purchases of mortgage-backed securities.
The Dow, suddenly sinking slightly into the red, is reacting to the hawkish elements in today's minutes. But the bulk of the committee is cautious to remove stimulus, at least for now as voiced today by Chairman Bernanke in his Washington testimony.