The minutes of the September 26 FOMC meeting
- Gradual approach balances risk of going too fast and too slow
- Almost all policy makers considered it appropriate to remove reverences to monetary policy being accommodative in statement.
- Noted estimates of neutral rate would be only one factor in setting rates
- Policymakers pointed to growth in leveraged loans, loosening of standards for loans and growth of non-bank loans as reasons to be mindful of financial stability
- Noted that rise in longer term yields made inversion of yield curve less likely
- Almost all policymakers saw little change in the economic outlook
The market is seeing the minutes as hawkish on first blush. Here's what Morgan Stanley said before the release:
"The Fed minutes due today may push USD initially higher, but central bank hawkishness will not bode well for risk appetite. USD and risk are now positively correlated, suggesting selling USD rallies today."
USD/JPY is at the best levels of the day, up 20 pips to 112.45.
One interesting change is the view on inflation risks. Three now see them tilted to the upside compared to one previously. None see the risks tilted to the downside.
