FOMC minutes preview - Nomura

Analysts at Nomura explained that at the end of 2-3 May meeting, the FOMC acknowledged that recent spending data had been weaker than expected. 

Key Quotes:

"However, it stated explicitly that it viewed “slowing in growth during the first quarter as likely to be transitory.” Also, incoming information and our analysis on residual seasonality in real GDP suggest some of the weakness in spending data in Q1 might have reflected the underlying momentum. In this regard, it would be worth looking at which data and what kind of analysis the FOMC monitored in assessing the economic momentum."

"Moreover, recent data on inflation point to some deceleration in core inflation. Any remark on the FOMC’s assessment on the recent development on inflation would be interesting. Note that since the FOMC meeting, labor markets and inflation data have sent contradicting signals."

"Nonfarm payroll growth remained steady, but core CPI inflation was weaker than market expectations in March and April. The second month of soft core CPI data may marginally lower some members’ confidence regarding the progress on the Fed’s 2% inflation target."

"Last, minutes from this meeting may provide some indication of balance sheet adjustment specifics, while FOMC participants appeared to be forging consensus on the operations of balance sheet normalization."