The Fed Meeting Minutes from the March 17 meeting.
Here is the link to the Fed Meeting Minutes:
Treasury market functioned well over most of the period, although measures of market liquidity deteriorated
somewhat toward the end of February.
- Rates implied by interest rate futures maturing over the
next several years rose notably over the intermeeting period, reportedly reflecting a reassessment by market participants of the expected path of the target range for the
federal funds rate
- Econmy remains far from the Fed’s goals
- It would be some time before substantial further progress on goals
- Path remains uncertain with the pandemic continuing to pose risks
- A number of officials highlighted importance of communicating progress ahead of QE taper
- Labor market
conditions improved in January and February, but employment was still well below its level at the start of 2020
- The concentration of job losses among
lower-wage workers since early last year had resulted in
outsized increases in average hourly earnings and compensation per hour that were not indicative of tight labor
- Consumer spending appeared to be increasing in the
first quarter at a pace considerably faster, on balance,
than in the fourth quarter of last year
- Incoming data on inflation were a little above what the
staff had expected. The 12-month changes in total and
core PCE prices were expected to transitorily move
above 2 percent in coming months, as the low inflation
readings from the spring of last year dropped out of the
- inflation was forecast
to be temporarily boosted this year by the expected
emergence of some production bottlenecks and supply
- The staff continued to see the uncertainty surrounding
the outlook as elevated.
- The uncertain course
from the emergence of morecontagious strains of the coronavirus was still viewed as tilting the risks
to the economic outlook to the downside
- Participants observed that the pace of the economic recovery had picked up recently and that the economy
continued to show resilience in the face of the pandemic.
- Economic activity and employment were currently well
below levels consistent with maximum employment
- A number
of participants stressed that recently enacted fiscal support would help address some of the hardships faced by
these groups and that monetary policy would also help
by promoting the economy’s return to the Committee’s
goals of broad-based and inclusive maximum employment and price stability.
- Household spending had risen
notably so far this year and anticipated that further gains
in consumer spending would contribute significantly to
the economic recovery
- Many participants also pointed to the elevated level
of household savings and judged that the release of pentup demand could boost consumption growth further as
social distancing waned.
some District contacts continued to report that firms in
industries such as CRE or leisure, travel, and hospitality
were struggling from pandemic-related social distancing,
other District contacts reported that activity in these industries had started to improve
- A few participants noted that higher crop prices were continuing
to boost income in the agricultural sector
- Participants noted that overall financial conditions remained highly accommodative, in part reflecting the
stance of monetary policy
- Disorderly conditions in Treasury markets or a persistent rise in yields
that could jeopardize progress toward the Committee’s
goals were seen as cause for concern
- Most participants noted that they viewed the risks to the
outlook for inflation as broadly balanced.
- Several remarked that supply disruptions and strong demand
could push up price inflation more than anticipated.
- Several participants commented that the factors that had
contributed to low inflation during the previous expansion could again exert more downward pressure on inflation than expected.
- Participants judged that the Committee’s current guidance for the federal funds rate and asset purchases was
serving the economy well
- Various participants noted that changes in
the path of policy should be based primarily on observed
outcomes rather than forecasts
- A number of participants highlighted
the importance of the Committee clearly communicating
its assessment of progress toward its longer-run goals
well in advance of the time when it could be judged substantial enough to warrant a change in the pace of asset
- All members agreed to maintain the target range for the
federal funds rate at 0 to ¼ percent, and they expected
that it would be appropriate to maintain this target range
until labor market conditions had reached levels consistent with the Committee’s assessments of maximum
employment and inflation had risen to 2 percent and was
on track to moderately exceed 2 percent for some time.
The overall meeting minutes are not presenting much/any surprises to what the chatter has generally been. There does not seem to be a lot of push back from members as to the path going forward. That path is different than in the path.
The evolution has been spurred by the the move prior to the pandemic, the 8.5M of people who remain out of work.
The US stocks have moved modestly higher after the release. Yields have ticked up a little. Gold is down about -$3. In the forex, the USD is a bit stronger. The CHF remains the strongest followed now by the USD. The AUD, NZD and GBP are the weakest.