Analysts at Danske Bank note that the FOMC minutes revealed a central bank on track to deliver rate hikes until the ‘neutral’ 3% is reached (probably in June 2019 after hikes in both December-18 and March-19).
Key Quotes
“After that, monetary policy will be more ‘stop and go’ depending on how the economy and markets are doing, but ‘a substantial majority’ expect policy to turn contractionary. There were no discussions about the target for the balance sheet (i.e. when QT ends) or the future monetary policy framework (although a couple of FOMC members thought it would be good ‘ to hold a periodic and systematic review of’ the monetary policy framework).”
“The minutes showed that ‘almost all’ considered it appropriate to remove the phrase stating policy ‘ remains accommodative’, because the removal would not signal a policy change while waiting would give a false sense of the certainty as to the actual level of the neutral rate. Finally, the minutes did not give any indications that the board had been influenced by the recent critique from President Trump.”
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