8 Apr 2015
FOMC Minutes: dovish risks – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team notes that the FOMC Minutes from the March meeting where Fed dropped ‘patient’ and lowered Fed funds projection will be the highlight for today, and risks exist that some participants might term the minutes dovish.
Key Quotes
“While the minutes make for nice reading, if you like that sort of thing, in terms of policy signals, we argue it is weak. It is a cacophony of sounds, and the minutes are crafted in a way that makes it difficult to understand what is being argued against.”
“There is some risk that participants read the minutes dovishly, especially in the light of last week's disappointing employment report. No doubt the exchange rate got more air time.”
“We argue that the Fed's leadership is key for the policy outlook, and it has already expressed itself on a number of issues that will likely be discussed in the minutes.”
“First, the Yellen Fed has begun normalizing monetary policy by normalizing the forward guidance. It is no longer date specific, but rather driven by the data.”
“Second, the Fed would like to see the economy move closer to the dual mandate of full employment and price stability, without risking the third mandate of financial stability.”
“Third, the US economy faces headwinds, but they are likely to prove temporary, and this includes the impact of the dollar's rise.”
“Fourth even when lift-off comes, the rate increases are likely to be gradual and peak at levels lower than in past cycles. In this sense, neither 1994 nor 2004 will be models for this cycle.”
Key Quotes
“While the minutes make for nice reading, if you like that sort of thing, in terms of policy signals, we argue it is weak. It is a cacophony of sounds, and the minutes are crafted in a way that makes it difficult to understand what is being argued against.”
“There is some risk that participants read the minutes dovishly, especially in the light of last week's disappointing employment report. No doubt the exchange rate got more air time.”
“We argue that the Fed's leadership is key for the policy outlook, and it has already expressed itself on a number of issues that will likely be discussed in the minutes.”
“First, the Yellen Fed has begun normalizing monetary policy by normalizing the forward guidance. It is no longer date specific, but rather driven by the data.”
“Second, the Fed would like to see the economy move closer to the dual mandate of full employment and price stability, without risking the third mandate of financial stability.”
“Third, the US economy faces headwinds, but they are likely to prove temporary, and this includes the impact of the dollar's rise.”
“Fourth even when lift-off comes, the rate increases are likely to be gradual and peak at levels lower than in past cycles. In this sense, neither 1994 nor 2004 will be models for this cycle.”