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The FOMC Meeting Minutes show that the members are worried about low inflation for a long period of time but are not too worried about a global slowdown. All in all, the minutes  have a slightly more dovish tone than the hawkish statement, although  they aren’t too extreme.

The USD fell  but bounced back and is slightly stronger. Update: the dollar is now on the back foot. Another update: the dollar is strengthening again. The markets usually take their time in digesting the  minutes and “agreeing” on a narrative. This may last into the European session, and we will probably see the full response only then.

Regarding inflation, they said they should be alert for long term market based expectations. However, only “a few” expressed worries that inflation could be below target for “quite” some time.

They did discuss a weaker Europe, China and Japan but saw a limited impact for the US.

“Considerable time”: some wanted to drop it while others saw it as useful.

Currency reactions

  • EUR/USD had a false break  above 1.2570, but  returned back to the 1.25-1.2570 range at 1.2560. Good German data supports the euro.
  • USD/JPY dipped but then climbed. It  remains high at 117.65. The BOJ  decided to continue its all-in QE program with a wider majority this time.
  • GBP/USD jumped above 1.57 but went back. It got a boost from the UK minutes earlier in the day.
  • USD/CAD is falling to 1.1320 – the greenback is falling after making big gains against the loonie.
  • AUD/USD remains depressed around 0.8630, with the initial bounce being limited.
  • NZD/USD is attempting a rise to 0.79, which is unsuccessful at the time of writing.

Select quotes

From the statement, about wages:

Business contacts reported employment gains in several parts of the country, with relatively few pointing to emerging wage pressures, although one participant indicated that larger wage gains had been accruing to some individuals who switched jobs.

And about the dollar, they don’t seem too worried:

Several participants judged that the decline in the prices of energy and other commodities as well as lower long-term interest rates would likely provide an offset to the higher dollar and weaker foreign growth, or that the domestic recovery remained on a firm footing

These are the minutes from the October 29th meeting in which the Fed announced the end of Quantitative Easing and also sounded quite hawkish on the job market. In addition, they did not seem to be extremely worried about low inflation, the situation in the euro-zone nor were there hawkish dissenters. On the contrary, there was one dovish one.