The FOMC has put yield curve control (YCC) on the back burner. That's one key message from the July Minutes released yesterday. The Minutes cited three main reasons why most Committee participants don’t see YCC as an attractive option now. @federalreserve @econtwitter @piie 1/6

First, financial markets already expect the Fed to hold its policy rate at zero for the next few years, suggesting the Fed has plenty of credibility about its near-term intentions and doesn't need a new tool for reinforcing them. 2/6

Second, Committee members are anxious about losing control over the size of their balance sheet. Under YCC, the FOMC would be committed to purchasing *all* eligible securities if need be. They don't want to risk owning—say—all Treasuries with less than 4 years to maturity. 3/6

Third, Committee members are anxious about whether they could exit from this policy gracefully, without market disruptions. They may be thinking back to the "temper tantrum" of 2013. 4/6

YCC is not stricken from the list of tools the Committee might turn to if conditions become more dire, the Minutes make clear. But barring unforeseen circumstances, YCC won’t play a prominent role in the monetary policy toolkit of the next few years. 5/6

For more on why YCC is not the most effective way to harness the power of the Fed's balance sheet capacity, see https://www.piie.com/blogs/realtime-economic-issues-watch/fed-has-better-tools-yield-curve-control 6/6