7 Jan 2015
FOMC minutes outlook: Dependent on data — CA
FXStreet (Guatemala) - Analysts at Credit Agricole take a view on the FOMC minutes.
Key Quotes:
"In the December FOMC meeting minutes, the discussion behind the forward guidance changes will provide a better gauge of the balance of views on the dove-hawk scale with regard to economic conditions and the rate lift-off. We will look for additional clues on the dove-hawk balance in the December FOMC minutes”.
“While the December FOMC statement offered a hawkish tone in introducing “patience” in policy normalization the Fed dampened such sentiment by stressing that its guidance remains consistent with the previous statements’ “considerable time” characterisation".
"We find that the altered guidance does not signal a change in the policy outlook, which remains dependent on the data. Yet, somewhat unsurprisingly, it prompted two hawks to dissent”.
"Further insight on the Fed’s views on the labour market improvement and disinflationary pressures will be useful in understanding the introduction of “patience”. Downward movement in the median fed funds rate projections added a dovish angle and implies a slower pace in rate hikes, so any more information on postlift-off normalisation will be helpful as well. Discussion about the impact of declining energy prices on domestic inflation and financial stability will be of particular interest, given recent oil price movements and financial market volatility”.
"As Chair Yellen noted in her press conference that the normalisation process is unlikely to begin for “at least the next couple of meetings,” any additional comments on the timing may be offered in the minutes. Finally, the minutes likely offered more discussion on segregated accounts, other interest rate tools and the Fed’s balance sheet normalization process".
Key Quotes:
"In the December FOMC meeting minutes, the discussion behind the forward guidance changes will provide a better gauge of the balance of views on the dove-hawk scale with regard to economic conditions and the rate lift-off. We will look for additional clues on the dove-hawk balance in the December FOMC minutes”.
“While the December FOMC statement offered a hawkish tone in introducing “patience” in policy normalization the Fed dampened such sentiment by stressing that its guidance remains consistent with the previous statements’ “considerable time” characterisation".
"We find that the altered guidance does not signal a change in the policy outlook, which remains dependent on the data. Yet, somewhat unsurprisingly, it prompted two hawks to dissent”.
"Further insight on the Fed’s views on the labour market improvement and disinflationary pressures will be useful in understanding the introduction of “patience”. Downward movement in the median fed funds rate projections added a dovish angle and implies a slower pace in rate hikes, so any more information on postlift-off normalisation will be helpful as well. Discussion about the impact of declining energy prices on domestic inflation and financial stability will be of particular interest, given recent oil price movements and financial market volatility”.
"As Chair Yellen noted in her press conference that the normalisation process is unlikely to begin for “at least the next couple of meetings,” any additional comments on the timing may be offered in the minutes. Finally, the minutes likely offered more discussion on segregated accounts, other interest rate tools and the Fed’s balance sheet normalization process".