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FOMC Minutes: Key implications – TD Economics

FXStreet (Delhi) – Michael Dolega, Senior Economist at TD Economics, presents the key implications of the recently released FOMC minutes.

Key Quotes

“The meeting minutes reflect a relatively upbeat view of domestic economic activity, with the notion that strong growth in domestically-exposed sectors will outweigh the weakness in externally-exposed sectors. Moreover, inflation was generally viewed as gradually returning to target in light of the current outlook.”

“International risks have clearly diminished according to the Committee relative to their previous meeting round in September. On the other hand, uncertainty with respect to the U.S. labor market ticked up in light of the two poor payroll reports. Importantly, this meeting took place before the October payroll report, which likely assured that the labor market improvement remains on track.”

“With some participants already wanting to raise rates in October, and most expecting to be convinced by mid-December, we continue to expect a December lift-off is the most likely outcome, barring any ugly surprises from the data, or global financial markets. Having said that, we expect the Fed to increasingly emphasize the gradual, or even glacial, pace of hikes thereafter, likely assuaging fears and containing any unwarranted tightening in financial markets.”

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