FOMC Minutes Preview: Major Banks expectations from meeting minutes

Today, markets are keenly awaiting the release of an all-important May meeting minutes of FOMC, and as we move towards the decision timings, here are the expectations as forecasted by the economists and researchers of major banks.

TD Securities

“The release of the May FOMC minutes on Wednesday should show a cautious Fed with a majority expecting transitory low inflation. Recall that post-meeting Chair Powell emphasized that the current policy was appropriate and that the FOMC saw no reason to change in either direction.”

Danske Bank

“In the US, markets will keep an eye on the FOMC minutes from the May meeting set to be released later in the day. As the Fed has clearly communicated that it expects to be on hold for some time, focus will likely be mainly on the reasoning behind the surprise cut in the Interest on Excess Reserves (IOER).”

Deutsche Bank

“This evening we’ll get the FOMC minutes from the meeting earlier this month. Usually there would be a reasonable amount of focus on the minutes however, given the trade developments since then it’s likely that the they will be somewhat discounted as being stale. That being said the inflation debate will still be relevant and as a reminder Powell noted that several “transitory” factors had been weighing on inflation of late.”

“Our US economists noted that subsequent Fedspeak since Powell’s press conference suggest that there is a solid contingent of officials that agree with this cut of the data, though some find persistently below target inflation as troublesome, regardless of the causes. Therefore, it will be interesting to see how the debate plays out, especially in light of concerns around inflation expectations and the Fed’s policy framework review.”

Nordea Markets

“FOMC talk will be important this week, as one shouldn’t forget that the setback in S&P500 started already with Powells presser 1st of May (before Trumps tweeting). Powell speaks late Monday evening (CET) and he will be given the chance to feed the doves after Trumps re-escalation of trade tensions.”

“It may still be more important than usual whether he softens on the “inflation is transitory” stance from 1st of May.”

Scotiabank

“Powell's … May 1st press conference... tamped down market probabilities for a rate cut this year, but the conflict with China resurrected the bet … (minutes) may be stale because US China trade negotiations basically fell apart thereafter and this contrasts somewhat to Powell's portrayal of diminished risks to the outlook.”

“Improved NAFTA prospects are nevertheless a positive offset to trade policy risks.”

“In addition, the Fed's concern that inflation expectations are declining were at least partly allayed by the jump in consumer expectations this month that may partly reflect rising consumer aware of tariff influences.”

“Also watch for further discussion that reflects the central opinions across FOMC members on topics like whether soft core inflation represents transitory factors.”