— This is the script of CNBC's news report for China's CCTV on July 10, Thursday.
Welcome to the CNBC Business Daily, I'm Qian Chen.
It looks like the Fed is bent on ending its loose monetary policy….and has begun detailing how it plans to do so.
CNBC's Steve Liesman has a breakdown of the Fed's latest minutes.
THE FEDERAL RESERVE PROVIDING DETAILS OF HOW IT WILL EVENTAULLY BRING TO AN END THE GREAT MONETARY POLICY EXPERIMENT IT LAUNCHED IN THE WAKE OF THE FINANCIAL CRISIS.
MINUTES OF the JUNE MEETING, SHOW THE FED PLANNING TO END QUANTITATIVE EASING BY OCTOBER, IF THE ECONOMY IMPROVES AS EXPECTED.
THE FED WILL HOLD ONTO THE MASSIVE $4 TRILLION OF BONDS PURCHASED ON ITS BALANCE SHEET THRU QE AT LEAST UNTIL RATES HIKES BEGIN, maybe after that.
AT THAT POINT, THE FED COULD LET THE BALANCE SHEET WIND DOWN TO MORE NORMAL LEVELS, but do so VERY GRADUALLY...
THE FED SAID VERY LITTLE NEW ABOUT WHEN IT WILL HIKE INTEREST RATES OR BY HOW MUCH that left INTACT THE GENERAL MARKET EXPECTATION FOR GRADUAL AND MODEST RATE HIKES NEXT YEAR, probably beginning in mid-year.
THE MARKET LIKED WHAT IT HEARD, PARTICULARLY ABOUT THE FEDS' GRADUAL APPROACH TO TIGHTENING POLICY.
THERE IS DISAGREEMENT on the central bank: SOME ON THE FED BELIEVE THE JOB MARKET IS tighter than implied by the unemployment rate, others say it's looser. All of that could RISK INFLATION SOONER THAN EXPECTED. ECONOMIST ROB BRUSCA SAYS' THERE IS DANGER THE FED COULD MAKE A MISTAKE either way, either ACTING EITHER TOO FAST OR acting TOO SLOWLY.
[Robert Brusca, FAO Chief Economist] "If you do it at the wrong speed you can make any of those mistakes. And right now, we don't really know, because we had a terrible first quarter GDP number, it looks like we're digging out. Some of the employment numbers are starting to look better but, you know, we've created a million jobs over 5 months, several other times in this economic recovery so you can't put this job growth in the bag yet."
INDEED, THE FED SAID IT WAS SURPRISED BY THE SHARP DECLINE IN FIRST QUARTER GROWTH, BUT CONTINUED TO EXPECT A SECOND HALF REBOUND.THE SPEED OF THAT REBOUND, AND THE POTENTIAL FOR IT TO CREATE INFLATION, COULD ULTIMATELY DETERMINE HOW FAST AND HOW FAR THE FED RAISES RATES.
BUT THAT'S A PROBLEM FED CHAIR JANET YELLEN WILL CONFRONT WHEN SHE HAS TO. THE MINUTES OF THE JUNE MEETING SHOWing THE FED on a gradual path ending QE later this year, and beginning rate hikes sometime next year. Back to you.
That wraps up this edition of the Business Daily.
I'm Qian Chen, reporting from CNBC's Asian headquarters.