The minutes contained language that included “a number of participants judged that financial conditions remained accommodative relative to historical norms,” which could definitely be taken as hawkish. But the minutes also included a discussion of whether it would be appropriate to change “further gradual increases,” to something that’s a little more reflective of the macro uncertainty. The market, at least for the time being, is hoping for the latter, particularly after Fed Chairman Jerome Powell’s dovish speech yesterday.
Others would prefer that Powell just let the minutes do the talking. “Looking further ahead, the Committee’s economic outlook reaffirmed the policy path laid out by the September dot projections, with the qualifier that the future path of policy is not pre-set but is contingent on things playing out as expected, i.e. policy is becoming more data dependent,” writes Amherst Pierpont Securities’ Stephen Stanley. “Hopefully, Chairman Powell’s testimony next Wednesday on the economy will largely track the FOMC minutes and not include any more surprises in terms of assessments of where neutral policy lies.”
Write to Ben Levisohn at [email protected]