FOMC minutes in the limelight – Nomura

Analysts at Nomura suggest that the FOMC minutes will be eyed in today’s US session in order to analyse how participants view the trajectory of the policy rate path.

Key Quotes

“At the post-meeting press conference for the 13-14 June FOMC meeting, Chair Yellen mentioned the prices of both prescription drugs and wireless telephone services as transitory factors contributing to recent weakness in inflation. The most recent CPI release, also weaker than expected, came out the morning of the day of the press conference (14 June), possibly contributing to some FOMC members’ cautious remarks on the progress towards the FOMC’s goal of 2% inflation.”

“On the labor market front, data suggest tightening labor markets with the unemployment rate falling to 4.3%. Given the divergence between the strong labor market and weaker-than-expected inflation data, the minutes from the June meeting should shed further light on how the committee reconciled these two trends. Moreover, given the specificity of the updated Policy Normalization Principles and Plans, the minutes may contain some further information on how FOMC participants discussed the timing and other aspects of balance-sheet adjustment, although we may not see substantive details.”

“With markets largely expecting the balance-sheet adjustment announcement in September and the next rate hike more uncertain, more attention may be given to any part of the minutes that hint at how participants view the trajectory of the policy rate path and how sensitive another rate hike in 2017 would be to upcoming inflation data.”