FOMC voters weren't ready for a rate hike in October but they sensed that conditions could very well be met in December. This is the inspiration for the unusual reference in the October FOMC statement to the upcoming importance of the December meeting, a reference that together with the very strong October employment report are pointing strongly to a December rate hike.
And the odds for a hike shouldn't shift that much following today's minutes. Of the Fed's two policy goals, which are stated and restated again and again in the minutes, employment does look like it's improving. The second is less certain, as most readings on inflation are not moving with any certainty toward the Fed's 2 percent target.
And the minutes definitely offer very dovish overtones from some non-voters at the meeting who were concerned that the addition of the reference to the December meeting was too strong, adding that it was unlikely that economic data would warrant liftoff in December. Several even suggested consideration of new monetary stimulus if the economy fizzled.
Data dependence always makes FOMC minutes look like old history which puts into focus recent data that are headlined of course by the October jobs report. And remember, there was already one voter, Richmond's Lacker, who has long been ready for liftoff. The Dow is moving slightly higher in early reaction to the minutes.
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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