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Fed undeterred by USD appreciation – Danske

FXStreet (Barcelona) - The Danske Bank Research Team highlights the key points of the October FOMC Minutes release, and notes the absence of any mention towards deteriorating foreign economic and financial conditions nor the appreciation of the USD.

Key Quotes

“First, there were “a few” participants of the FOMC who did express concern that inflation could run below the Committee’s two percent target for quite some time. In addition, "many" highlighted the importance of watching for a downward shift in longer-term inflation expectations, which could make it even more worrisome if growth faltered.”

“Second, the statement did not mention the deterioration in foreign economic and financial conditions at all nor the appreciation of the USD. The minutes show that the reason is clear: “many participants saw the effects of recent developments on the domestic economy as likely to be quite limited””

“Third, the “considerable time” phrase was discussed. However, there is no indication that the Committee is about to change that wording in December. It seems that the new reference to data dependency in the October statement is preferred for now”

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