Credit Agricole expect that the FOMC minutes from the 1 November meeting will touch on some well-established themes from the past three months.
The minutes will be monitored for the strength of views held by those who want to see further progress on inflation moving towards the 2% objective before tightening monetary policy much more.
- Presidents Bullard, Evans, Kashkari and Governor Branaird likely fall into this group.
Others on the committee have put more emphasis on tightening resource constraints, notably unemployment below the natural rate and potential risks from low rates as investors reach for yield and drive up asset prices.
- This group favors continuing with gradual rate hikes.
We don't expect that the minutes will change market expectations for a December rate hike, currently fully priced in the OIS-market.
- We will be looking for any signs of possible dissents (Kashakari?) at the December meeting.
We do not believe that the minutes of the meeting discussion will delve much into the economic impact of tax changes in Washington.
- Given the lack of any details on 1 November, such a discussion would have been premature. However, those that favor continued tightening might believe that the potential for a deficit-financed fiscal stimulus could add to inflationary pressures down the road given estimates of potential growth and generally tight labor market conditions.
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The November Federal Open Market Committee minutes are due at 2pm NY time on Wednesday 21 November 2017
