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Members agreed that it would be appropriate to give less certainty about the path of inflation

Highlights from the FOMC minutes

  • In their discussion of current conditions, participants noted that with advances in vaccinations and strong political support, economic activity and employment indicators have continued to strengthen.
  • Year-over-year inflation rates abroad continued to rise, reflecting further increases in energy prices, continued pressures from supply bottlenecks and past exchange rate depreciation. in some EMEs.
  • The Common Staff Inflation Expectations Index, which combines information from numerous inflation expectations and inflation compensation indicators, was little changed from the second quarter and remained at its highest level since 2014.
  • Over the intervening period, an increase in perceived inflation risks and an associated upward revision in the implicit market path of the fed funds rate contributed to the rise in Treasury yields.
  • participants noticed that demand for most consumer goods remained strong
  • A number of participants noted that there would likely be a drag on household spending as previous budget support wears off
  • Many business contacts experienced worsening supply chain issues
  • Participants felt that supply constraints would likely continue for longer than expected.
  • Participants expected better payroll figures in the coming months
  • Some participants pointed out that the price increases had become widespread
  • Many participants highlighted considerations that might suggest that high inflation may prove to be more persistent
  • Participants generally supported the plan to implement reductions in the pace of net purchases of agency treasury and MBS securities of $ 10 billion and $ 5 billion per month.
  • Some participants preferred a slightly faster rate of reduction
  • Various participants noted that the Committee should be prepared to adjust the pace of asset purchases and raise the target range for the federal funds rate earlier than participants expected if inflation continued to exceed levels consistent with the targets. of the Committee.
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Since that meeting, CPI and PCE inflation figures have increased. It’s safe to say that the Fed’s dove, Mary Daly, was one of the participants who generally “supported” the current rate of reduction, but has already moved to a faster cut.

In light of that, I don’t know if these minutes tell us a lot.

The markets do not move immediately.

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