The Fed Meeting minutes from the March 17 meeting

The Fed Meeting Minutes from the March 17 meeting. 

Here is the link to the Fed Meeting Minutes:


  • The
    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
    market conditions
  • 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
    calculation window
  •  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. 
  • While
    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. 

USD is strronger

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