Interesting Reaction to FOMC Minutes
The minutes from the last FOMC meeting were just released, and the market experience a volatile reaction. The initial move was lower, as the market tested today's lows, but then it quickly reversed higher and snapped back all the way to break-even for the day.
Here is a quick summary of the comments:
- FOMC says growth, inflation pressures may ease gradually
- Lacker was the lone dissenter
- August rate decision was a close call
- Below potential growth may last for six quarters
- Past tightening may hold growth below potential
- Limited risk in deferring necessary tightening
- Considerable uncertainty about housing outlook
- Upside risk to inflation remains significant
From these comments, it appears the Fed was still focused on inflation and implying that they are merely pausing while awaiting more data. I believe that inflation has peaked and that they will not raise rates again.