Highlights of the Minutes from the Sept 16-17 Fed meeting:
- Fed officials said 'prudent' to wait for clarity on the outlook
- Most participants felt conditions for hiking rates had already been met or would be met by the end of the year
- Some participants warned that a 'premature' rate hike could hurt the Fed's credibility if inflation stayed low, while some expressed concerns about delaying rate increases
- Many participants saw global conditions as increasing downside risks to UK
- Expressed concern over the impact of global conditions on US but felt the effects on inflation would be passing and on growth would be small
- Several participants worried that inflation could be dragged even lower by oil prices and the high value of the dollar
- A couple expressed 'unease' that inflation expectations might also be dropping
- Full text of the Minutes
"The staff viewed the uncertainty around its September projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. The risks to the forecast for real GDP and inflation were seen as tilted to the downside," the Minutes say.
Note that the meeting was before the soft non-farm payrolls report.
The US dollar is down about 20 pips on the headlines but I don't see too much to get excited about here. We know the Fed was fairly hawkish in the statement and these Minutes strike me as close to expectations.
I don't see the case for selling the US dollar on these headlines and I'd consider fading it. The Fed Funds futures market is still pricing a 39% chance of a hike at the Dec meeting.
