What to watch for in the FOMC Minutes

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5 things to watch out for

  1. The Fed removed its assessment on the balance of risks. What was the internal debate?
  2. The international outlook. "Foreign economic developments, in particular, pose risks to U.S. economic growth," Yellen said last week.
  3. Path of rate hikes. The Fed projections say 4 hikes, the market says no hikes.
  4. Symmetry debate. The Fed's longer-run strategy document framed the 2% inflation target as symmetrical. Bullard dissented.
  5. Negative rates. Did the Fed take a closer look at negative rates in January?

More at the WSJ.

 

Why Yellen, Fed may be heartened by CPI data Federal Reserve Chairwoman Janet Yellen will be heartened by the surprise jump in the core consumer price index as it confirms what she told Congress last week that prices would rise over the medium term.

The data “validates the Fed’s view that inflation is alive and kicking” said Omair Sharif, economist at SG Americas Securities in New York.

Core prices are up 2.2% over the past 12 months, the biggest increase since the summer of 2012.

Although too much inflation is viewed as dangerous for the economy, Fed officials think that a 2% inflation rate is best for the economy to grow.

Inflation has been trending below that target for the past four years. Low inflation is a signal of weak demand in the economy and raises fears of actual decline in prices or deflation, which can damage an economy, especially one with high debt burdens like the United States.

The Fed’s 2% inflation target is based on a different inflation measure, the personal consumption expenditure index, which tends to run a bit more slowly than the CPI.

Over the last six months, that gap has been pronounced.

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They could not care less

 

Fed's Williams: Markets really worried about downside risks More from Williams:

  • Yield curve shows no sign of looming recession
  • Yield curve reflects market risk perception
  • Yuan won't float freely in next 5-10 years
  • Slowing Chinese commodity demand to affect US
  • He's less concerned about Chinese growth than others

I don't know how he can pretend to US the yield curve for anything when the Fed is deliberately manipulating the yield curve. If overnight rates were at the 2-3% range that some FOMC members want, it would be inverted.

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