They believe, according to an email, that more Fed support for the economy could come in the form of a combination of buying strategies.
“We ultimately expect further balance sheet expansion through purchases of a combination of Treasury securities and agency mortgage-backed securities; while this could well be announced at the September meeting, we suspect it is more likely to occur in December or early 2013,” writes Goldman analyst Andrew Tilton.
The tone of the minutes suggest some sort of economic boost, and Goldman notes this could come in the form of more agressive tactics, such as the combination of purchases suggested above. The Fed may also consider shifting from guidance based on calendar dates to guidance conditional on economic outcomes.
Admittedly, some parts of the economy recovered more in the past three weeks, the lag time between the meeting and the release of the minutes. Tilton doesn’t believe the tone of the FOMC would substantially change as a result, however.
“Even some further modest upside surprises to the economic data over the next few weeks would leave considerable uncertainty about the strength and durability of the recovery,” he added. “So the main question is not whether the data will have improved enough to forestall easing — almost certainly not. Instead, it is whether the data will have improved enough to forestall the most aggressive easing options.”