A lot has changed since the November 2nd FOMC statement – most notably the world has suddently become awesome again.
The relatively benign statement (and election result) has left rate-hike odds at 100% for December but comment from Fischer and Yellen since have hinted concerns at the need for Trump fiscal spendfest. The main risk going in to the minutes was a dovish tilt for the future, tamping the current ‘nothing can stop us now’ attitude (and we note the dollar leaked lower into the release).
But sure enough, The Fed confirmed a rate-hike was approrpoate “relatively soon” and was “important to Fed credibility.”
*MOST FED OFFICIALS SAW RATE HIKE APPROPRIATE `RELATIVELY SOON’
*MANY FED OFFICIALS SAW STABILITY RISKS IF JOB MKT OVERHEATED
*SUBSTANTIAL MAJORITY FED OFFICIALS SAW RISKS ROUGHLY BALANCED
*SOME OFFICIALS SAW DEC. HIKE IMPORTANT TO FED CREDIBILITY
*FED OFFICIALS SEE RESERVE BALANCES STAYING LARGE FOR `A WHILE’
The biggest split in the November meeting minutes was between those who wanted a rate hike “relatively soon” if incoming data continued to show an improving economy, with some explicitly calling for a move in December, and yet another pushing for a hike as soon as last month.
Some officials argued that “an increase should occur at the next meeting,” according to minutes of their Nov. 1-2 meeting, released Wednesday following the usual three-week lag. That indicated the Fed was leaning toward raising rates at its Dec. 13-14 gathering barring an upset to the economy. However, “Most participants expressed a view that it could well become appropriate to raise the target range for the federal funds rate relatively soon.” (key excrepts below)….
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