FOMC Minutes: ''A gradual tapering process would likely be appropiate''

Developing story.

The Fed released its minutes of the September monetary policy meeting.

Key points coming through:

Participants reaffirmed that the committee's "substantial further progress" standard regarding its asset purchases was distinct from the criteria given in its forward guidance on the federal funds rate.

FED MINUTES:  THE COMMITTEE HAD ARTICULATED A DIFFERENT, AND MORE STRINGENT, TEST CONCERNING THE CONDITIONS THAT WOULD NEED TO BE MET BEFORE IT STARTED RAISING THE TARGET RANGE FOR THE FEDERAL FUNDS RATE

13-Oct-2021 12:01:47 - FED MINUTES: PARTICIPANTS GENERALLY ASSESSED THAT, PROVIDED THAT THE ECONOMIC RECOVERY REMAINED BROADLY ON TRACK, A GRADUAL TAPERING PROCESS THAT CONCLUDED AROUND THE MIDDLE OF NEXT YEAR WOULD LIKELY BE APPROPRIATE

13-Oct-2021 12:01:48 - FED MINUTES:  VARIOUS PARTICIPANTS STRESSED THAT ECONOMIC CONDITIONS WERE LIKELY TO JUSTIFY KEEPING THE RATE AT OR NEAR ITS LOWER BOUND OVER THE NEXT COUPLE OF YEARS

13-Oct-2021 12:02:39 - FED MINUTES:  PARTICIPANTS NOTED THAT IF A DECISION TO BEGIN TAPERING PURCHASES OCCURRED AT THE NEXT MEETING, THE PROCESS OF TAPERING COULD COMMENCE WITH THE MONTHLY PURCHASE CALENDARS BEGINNING IN EITHER MID-NOVEMBER OR MID-DECEMBER

More to come...

Market implications 

Prior to the release, the US dollar had eased back from a one-year high as longer-dated Treasury yields fell after US inflation data, despite it showing that prices rose solidly in September, advancing expectations for Federal Reserve tightening. However, the greenback has been ripe for bearish pickings considering how far it has come in just a couple of weeks, rising some 1.7% and running into a wall of resistance as per the Sep 2020 highs.

US dollar monthly chart

Meanwhile, the Fed funds futures indicate > 95% chance for Dec 22, ~70% chance for a Nov 22 rate hike. That's a big increase vs. last week each.