Many members saw more downside risks to inflation. They were also worried about the world.
These are the minutes from the January meeting, in which the Fed left rates unchanged after the December hike. In that meeting they showed caution and the dollar retreated a bit.
Among the things to watch are (updated):
- Any hint about the next rate hike: Nothing specific but the worried sentiment is indicative of no hike in March, something we already knew.
- General confusion: They cannot see the correlation between very worried financial markets against generally positive economic indicators. Well, I guess they have to get used to higher volatility and overreactions. They see higher uncertainty.
- Worries about the global economy. A number of officials talked about China. It was also reflected in Yellen’s testimony.
- Worries about inflation: More downside risks has been noted. This already had great emphasis in the December. The strength of the greenback and falling oil prices mean inflation is lower for longer.
- Satisfaction about employment: It is still looking good: most saw it as solid, some as moderate.
- What they think about growth going forward: “Moderate” is the word offered here.
- Why they removed the “balanced risks phrase”: At the moment this seems like something that can be ignored. However, uncertainty can explain that. In clearer words: they don’t know.
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