Back in April, when the world was still reeling from the China devaluation inflicted market slump, the Fed’s discount rate minutes for the months of March/April showed that 4 regional Feds wanted a 25 bps rate hike, up from just two – the Richmond Fed and Kansas City – in the Feb/March meeting. Moments ago the Fed released its latest May/June Discount Rate Minutes which revealed that both the (Jim Bullard’s) St. Louis and Boston Feds joined four other regional Feds, Cleveland, Richmond, Kansas City and San Francisco, in seeking a quarter point increase in Fed discount rate to 1.25 percent prior to the June 14-15 FOMC meeting.
Obviously, there was no rate hike, as the Fed chose to maintain its primary credit rate at 1%. What is more surprising is that Bullard’s St. Louis Fed was among the “hawks”, even though just a few weeks later, the same James Bullard infamously flipflopped and now predicts just one rate hike until 2019.
The regional directors who supported a rate hike increase did so ‘in light of actual and expected strengthening in economic activity and their expectations for inflation to gradually move toward the 2 percent objective.’
However, it is worth noting that Boston, Richmond, St. Louis, New York, Philadelphia, and Minneapolis voted on June 2, just a day ahead of June 3 report which revealed the abysmal May U. S. payrolls report and which ground the Fed’s rate hike cycle to a halt.
From the minutes:
This post was published at Zero Hedge on Jul 12, 2016.
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