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Deutsche Bank analysts suggest that the most immediately-relevant takeaway from the minutes was that there is minimal support for a 50bps cut in September, and markets moved to price in only a 12% chance of the bigger cut which is 20% down from before the minutes and from as high as 50% last week, though a 25bps cut remains fully priced.

Key Quotes

“The minutes also suggested that policymakers were attentive to the trade war risks and were not caught off guard by the recent escalation, saying that “participants were mindful that trade tensions were far from settled.”

“As for the Fed’s longer-term policy review, there were several indications that the discussions are accelerating, as policymakers reportedly discussed using QE “more aggressively” and also analyzed “makeup strategies.” The latter “could be designed to promote a 2 percent inflation rate, on average, over some period,” which would have dovish implications for rates. While we’re on the Fed, President Trump continued his relentless attack on twitter, calling Powell “a golfer who can’t putt, has no touch”.”