US: FOMC Minutes

January 4, 2017 01:00 CST

Wait-and-see was the theme of the December 13 and 14 FOMC meeting as members expressed caution in evaluating the outlook given uncertainty on how federal spending, tax, and regulatory policies would unfold under the incoming Trump administration. But policy makers did see upside risks to the economic outlook, reflected in new forecast assumptions among about half the members for greater fiscal stimulus. And many of the 17 participants saw the risk of a sizable undershooting for their unemployment target, one that could in the future trigger a faster-than-expected increase in the federal funds rate. But this was not cited as an urgent concern given that inflation, though improving, still remained below their 2 percent target. With the unemployment rate at a low 4.6 percent, the meeting produced the second rate hike this cycle, a 25 basis point increase to a target range of 0.50 to 0.75 percent.

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.

Eight times a year