Highlights of the minutes of the Nov 1 FOMC meeting
- A few opposed near term hike on weak inflation outlook
- Meeting included broad inflation debate
- A few participants said rate hike should be delayed until data showed inflation was clearly on a path to 2%
- "Many participants" observed that weak inflation could prove persistent and may reflect drop in inflation expectations
- Some worried Fed could undercut inflation expectations by hiking with inflation below target
- 'A couple' participants discussed alternative frameworks for inflation, like price-level targeting
- Most participants continue to believe tighter labor market will ultimately lead to inflation
- Many said employment is at or close to full employment
- Full text of the minutes
There is a dovish tinge but it's among the minority. The US dollar dipped to session lows but bounced right back.
The next 3-4 months are critical for the Fed. If there isn't a pickup in inflation, they're going to hit the pause button until it comes.
From the staff review:
"Movements in domestic financial asset prices over the intermeeting period reflected FOMC communications that were read as slightly less accommodative than expected, economic data releases that were generally better than anticipated, and market perceptions that U.S. tax reform was becoming more likely."
Also, this is getting some attention from the doomsday crowd:
"The staff continued to judge that the overall vulnerabilities were moderate: Asset valuation pressures across markets were judged to have increased slightly, on balance, since the previous assessment in July and to have remained elevated"
