January 9, 2019 2:30 p.m. FOMC Releases Unsurprising Minutes - by Lester Murray
This afternoon's publication of the FOMC's Meeting Minutes from December revealed little that wasn't already suspected by most observers. Readers may recall that December's vote to raise the Fed Funds target was unanimous, but that doesn't mean all members are thinking in lockstep. Much discussion took place over the need for more hikes in light of softening inflation and inflationary expectations with some members expressing concern about market volatility and yield curve inversion. As has been expressed publicly by Chairman Powell, the Committee's future rate decisions and policy adjustments will be determined by economic performance data and are not on a pre-set schedule. Nothing we haven't all heard before. Earlier today, James Bullard, St. Louis Fed President, warned in a newspaper interview that moving ahead with more rate hikes in our current economic state will increase recession risk along with yield curve inversion. There was also discussion in the minutes relating to the current policy rate's nearness to "neutral". Despite Powell's comment in October that "we're a long way from neutral", the current consensus seems to be that we're very close to that mythical rate with the more dovish members expressing the belief that we're already there. Most readers of those minutes would probably be left with the impression that the Committee, as a body, is not averse to taking a pause in its quest for normalcy. Market reaction has been muted with Treasury yields little changed from where they've been most of the day. Equities, as usual, are all over the place, but the Dow is still hanging on to a green arrow.
Posted on Wed, January 9, 2019
by Lester Murray