Most participants at the September FOMC saw liftoff conditions being met by year end, a view that will likely boost expectations, at least perhaps slightly, for a rate hike at the December FOMC. But most members believed that conditions in September had not materially changed and it was prudent to hold off on liftoff, though one hawk, Richmond's Lacker, argued that low rates were no longer appropriate.
But there are definitely dovish overtones as several members pointed to low oil prices and the strong dollar as risks to the Fed's 2 percent inflation goal. Some said downside risks to the economy had increased. It was also noted that the expected path of the federal funds rate, rather than the exact timing of the initial increase, was most important in influencing financial conditions.
Data dependence ages the minutes, putting into focus recent data headlined of course by the soft September jobs report that, at the time, all but scratched any expectations for liftoff at this month's FOMC and pushed the odds for December to below 50/50. Today's results perhaps do underscore that members had been strongly leaning, as recently as last month, for a 2015 increase. Markets were choppy in immediate reaction to the minutes but have since settled back to little changed.
The Federal Open Market Committee issues minutes of its meetings with a lag. The minutes of the previous meeting are reported three weeks after the meeting.
The FOMC has changed dramatically in the transparency of its operations. It now discloses policy changes at the end of each meeting. Historically, the Fed used to keep investors guessing about policy changes and Fed officials did not appear on the speaking circuit as frequently as they do now.
Since the Fed moved up the release of the minutes to three weeks after a meeting from six in January 2005, the minutes have become a market mover as analysts parse each word looking for clues to policy. However, the minutes do include the complete economic analysis compiled by Fed officials and whether or not any FOMC members have voiced opinions at odds with the rest of the group.
Investors who want a more detailed description of Fed opinions will generally read the minutes closely. However, the Fed discloses its official view at the end of each FOMC meeting with a public statement. Fed officials make numerous speeches, which freely give their views to the public at large.
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