Fed: Reasserted its ability to hike rates in June - BBH

Research Team at BBH, suggests that they felt strongly that the FOMC minutes would be more hawkish than the statement that followed the meeting, and we were not disappointed.

Key Quotes

“However, our caveat remains: the minutes dilute the signal that emanates from the Fed's leadership of Yellen, Fischer, and Dudley.

The latter two speak in the NY morning. Fischer and Dudley's comment will be scrutinized for confirmation of the hawkish read of the FOMC minutes. Yellen speaks at Harvard at the end of next week. Her comments at the Economic Club of NY at the end of March squashed the earlier discussion by several regional presidents about the appropriateness of a hike last month.

There was a large gap between what the Fed was saying was likely to be appropriate (two hikes) and what the investors thought probable (not always fully convinced of one). This gap threatens to limit the Fed's degrees of freedom without risking market disruption. The Fed has regained the upper hand here. It has reasserted its ability to hike rates in June. Moreover, the response by the dollar and the interest rate markets suggests monetary policy still matters.”