Fed Minutes Published Early After Bloomberg Leak; Mixed Messages

Fed Minutes Published Early After Bloomberg Leak; Mixed Messages

The details are unclear, but there was some kind of a snafu with the minutes of the recent July 28th and 29th Federal Reserve meeting being leaked early on Wednesday afternoon. Apparently media outlet Bloomberg accidentally published a portion of the minutes ahead of schedule. A few minutes later other media outlets followed suit in publishing the Fed minutes, and the full text of the minutes was posted on the Fed’s website shortly thereafter.

Analysts note that the July Fed FOMC minutes are remarkably balanced, and give very little hint whether the Fed will actually carry through on the September interest rate hike that most market participants are anticipating.


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Highlights from the Fed minutes

Comments on the timing for interest rate hikes

  • The Fed governors agreed to change the text of their statement on when to hike interest rates by noting that ‘some’ further improvement in the labor market and inflation outlook would be required
  • One member of the FOMC was prepared to hike rates now, but was willing to wait for more info
  • Several FOMC members believed labor market slack would be eliminated over the near term
  • Some members of the committee said a rate hike was still not warranted, but “we’re approaching that point”

Comments on inflation

  •  “It was noted that considerable uncertainty remained about when wages might begin to accelerate and whether that development might translate into increased price inflation.”
  • “Some participants cited downside risks to inflation.”
  • “Survey measures of longer-term inflation expectations remained stable, while market-based measures of inflation compensation were still low.”

Other comments from Fed FOMC

  • The committee has made no decision yet on phasing out reinvestments
  • Of note, most FOMC members indicated that they want to end balance sheet reinvestment of MBS and treasuries using different strategies
  • “Activity in the housing sector improved somewhat in recent months but remained slow.”
  • Most members judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point
  • It was also noted by committee members that a prompt start to normalization would likely convey the Committee’s confidence in prospects for the economy

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