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21 Aug 2014
July Fed minutes slightly more hawkish - Deutsche Bank
FXStreet (Łódź) - Jim Reid from Deutsche Bank comments on the July FOMC minutes released on Wednesday, pointing out that they struck a more hawkish tone than seen at the previous meetings, despite placing emphasis on balanced risks to the outlook.
Key quotes
"Two statements probably best highlighted the debate that seems to have occurred at the Fed’s meeting. First, “some participants viewed the actual and expected progress toward the Committee’s goals as sufficient to call for a relatively prompt move toward reducing policy accommodation to avoid overshooting,” the Fed’s unemployment and inflation objectives in the medium term."
"And second some participants were said to be, 'increasingly uncomfortable with the Committee’s forward guidance,' as, 'in their view it suggested a later initial increase in the target federal funds rate as well as lower future levels of the funds rate than they judged likely to be appropriate'.”
"Whilst to our eye there certainly seems to have been a pick up in the debate at the last meeting it shouldn’t be overemphasised."
"As the minutes went on they noted how, 'most participants indicated that any change in their expectations for the appropriate timing of the first increase in the federal funds rate would depend on further information on the trajectories of economic activity, the labour market and inflation'."
"Our key take-away is that whilst the centre-ground at the Fed may have shifted a little towards the hawks at the July meeting, it remains firmly in dove territory and crucially future action remains heavily data dependant."
Key quotes
"Two statements probably best highlighted the debate that seems to have occurred at the Fed’s meeting. First, “some participants viewed the actual and expected progress toward the Committee’s goals as sufficient to call for a relatively prompt move toward reducing policy accommodation to avoid overshooting,” the Fed’s unemployment and inflation objectives in the medium term."
"And second some participants were said to be, 'increasingly uncomfortable with the Committee’s forward guidance,' as, 'in their view it suggested a later initial increase in the target federal funds rate as well as lower future levels of the funds rate than they judged likely to be appropriate'.”
"Whilst to our eye there certainly seems to have been a pick up in the debate at the last meeting it shouldn’t be overemphasised."
"As the minutes went on they noted how, 'most participants indicated that any change in their expectations for the appropriate timing of the first increase in the federal funds rate would depend on further information on the trajectories of economic activity, the labour market and inflation'."
"Our key take-away is that whilst the centre-ground at the Fed may have shifted a little towards the hawks at the July meeting, it remains firmly in dove territory and crucially future action remains heavily data dependant."