FOMC Minutes: Fiscal stimulus or easy financial market conditions could boost output too much

The minutes from the Federal Reserve’s December 12&13 monetary policy meeting have been published, revealing that the Committee discussed how fiscal stimulus or easy financial market conditions could boost output too much and require a steeper path of rate hikes, as reported by Reuters.

The labor market had continued to strengthen and that economic activity had been rising at a solid rate. 

Members acknowledged that hurricane-related disruptions and rebuilding had affected economic activity, employment, and inflation in recent months but had not materially altered the outlook for the national economy. 

Two members preferred to leave the target range at 1 to 1-1/4 percent, suggesting that the Committee should wait to raise the target range until inflation moves up closer to 2 percent on a sustained basis or inflation expectations increase.

Members agreed that the timing and size of future adjustments to the target range for the federal funds rate would depend on their assessments of realized and expected economic conditions relative to the Committee's objectives of maximum employment and 2 percent inflation.

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December FOMC Minutes: Three areas to examine – Nomura.

The FOMC minutes released throughout 2017 were informative, revealing in the first half of the year the discussions and plans for the Fed’s balance sheet unwind, explains the research team at Nomura.

When are the FOMC minutes and how could they affect DXY?

According to the CME Group FedWatch Tool, based on current prices, the probabilities of a rate hike at the next meeting are below 1% and they jump to 56% for a move in March. The last numbers could change with the minutes. 

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.



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