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The minutes from the  Federal Reserve’s May 1st-2nd meeting  monetary policy meeting have been published, revealing that the Committee  discussed their outlook for the economy and rates, where all agreed on the inflation target should be met in coming months.

There is a hawkish bias in these minutes that lease a rate hike in June on the table.

Subsequently, in a risk-off marketplace at the moment, (JPY well bid), where US stocks have been unable to get off the floor in any meaningful  or sustained correction,   on the knee-jerk, however, the DJIA rallied while the S&P 500 also popped, robust against the daily declines.

The dollar is steady at 94.18, while the 2-year treasury 2.681% (3bps), The VIX 13.53. Gold is also higher.

Key notes from the minutes:

  • Modest inflation overshoot ‘could be helpful’
  • Most felt it would ‘soon be appropriate’ to hike should outlook remain intact
  • Trade raised a ‘particularly wide’ range of risks
  • A few noted that Fed funds could reach neutral level ‘before too long’ if rate increases continued
  • Some noted it may soon be appropriate to change guidance
  • Many saw little evidence of overheating of labor market with wage pressures ‘still moderate’
  • A few cautioned that inflation expectations remained somewhat low
  • Most viewed firming of inflation as providing ‘reassurance’ that 2% would be reached
  • Some officials saw forward-guidance revisions appropriate soon

Key quotes from the FOMC Minutes:


Related articles and previous Fed chatter

  • Fed members sounding curiously cautious – Westpac
  • US: Fed on track to hike three more times this year – Deutsche Bank
  • Fed’s Bostic: rate hikes this year is the correct path
  • Fed’s Bullard: need to see upside surprises to support further hikes – Bloomberg TV
  • Fed’s Bullard: inflation expectations are beginning to firm up
  • Fed’s Mester: US economy near Fed’s goals
  • Federal Reserve’s Harker: no rush to raise interest rates
  • US Fed’s Kashkari: slack might still be in economy

About the FOMC minutes

FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the  Federal Reserve  and are a clear guide to the future US interest rate policy.