From the FXWW Chatroom: The FOMC minutes were mostly balanced but to our read broke a bit more hawkishly than dovishly. The discussion about inflation eventually recovering to 2 percent and the explanation for the addition of “further” all pointed to more optimism regarding the outlook. We found precious little to support the belly-led rally in the aftermath of the minutes, though it’s possible that the market was expecting an even more hawkish tone or reacted more strongly to the dissenters who saw few signs of wage gains. In fact, the notion that “a number” of officials saw modestly stronger near-term growth implies that either projections for Fed funds from these officials at the next meeting will have to rise, or the Fed will imply a lower real rate with its hike path. The biggest dovish headline from the minutes related to wage growth and the lack of persistence in price pressures though this was the view of “a few” and “some” and “a couple” of participants. On inflation the Fed was somewhat balanced, suggesting that price pressures will materialize and writing off most recent decreases to one-off effects or to shifts in the structure of how some items like medical care are priced. The market reaction and 5-year led rally is more consistent with a dovish take on the release and we’re not sure the knee-jerk will hold up.”
Minutes of the Federal Open Market Committee, January 30-31, 2018:
https://www.federalreserve.gov/monetarypolicy/fomcminutes20180131.htm
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