A lot has changed since the November 2nd FOMC statement – most notably the world has suddently become awesome again. The relatively benign statement (and election result) has left rate-hike odds at 100% for December but comment from Fischer and Yellen since have hinted concerns at the need for Trump fiscal spendfest. The main risk going in to the minutes was a dovish tilt for the future, tamping the current 'nothing can stop us now' attitude (and we note the dollar leaked lower into the release). But sure enough, The Fed confirmed a rate-hike was approrpoate "relatively soon" and was "important to Fed credibility."
- *MOST FED OFFICIALS SAW RATE HIKE APPROPRIATE `RELATIVELY SOON'
- *MANY FED OFFICIALS SAW STABILITY RISKS IF JOB MKT OVERHEATED
- *SUBSTANTIAL MAJORITY FED OFFICIALS SAW RISKS ROUGHLY BALANCED
- *SOME OFFICIALS SAW DEC. HIKE IMPORTANT TO FED CREDIBILITY
- *FED OFFICIALS SEE RESERVE BALANCES STAYING LARGE FOR `A WHILE'
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Since the Nov FOMC statement, gold and bonds have been crushed as oil and stocks soared…
Heading into the minutes, the market has zero expectations of a surprise in December…
And looking further out at Fed funds, a 28% chance of a March hike is priced in and that rises to 61% by June and an 88% chance of at least one hike in 2017.
Key Excerpts:
Rate Hike Imminent:
Some participants noted that recent Committee communications were consistent with an increase in the target range for the federal funds rate in the near term or argued that to preserve credibility, such an increase should occur at the next meeting. A few participants advocated an increase at this meeting; they viewed recent economic developments as indicating that labor market conditions were at or close to those consistent with maximum employment and expected that recent progress toward the Committee’s inflation objective would continue, even with further gradual steps to remove monetary policy accommodation.
Credibility Concerns:
Some participants noted that recent Committee communications were consistent with an increase in the target range for the federal funds rate in the near term or argued that to preserve credibility, such an increase should occur at the next meeting.
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Full Statement:
can add when you are out
via http://ift.tt/2gmDQWk Tyler Durden