With less than two hours until the Fed releases the minutes to the June FOMC meeting which may shed some more light on how Fed officials view the simultaneous declines in unemployment and inflation, there are two key things markets will focus on:
Concern on inflation – As several speakers have sounded less hawkish on prices than Yellen did, a more dovish language on CPI isn’t new news. Balance sheet timing – Consensus here is for a pause when balance sheet reinvestment policy changes. However, as Citi’s Fraser King writes, there is no specific reason why the Fed would tie themselves to such a schedule, and expects additional clarity from the minutes may clarify. Indeed, as Stifel’s chief economist LIndsay Piegza writes, “the $4.5 trillion question on everyone’s mind remains when will the Fed start shrinking its balance sheet? Recall, the June rate announcement included details of the expected caps and tiered reduction patterns Fed officials expect to implement, but the timeline for said reduction was not specified.”
This post was published at Zero Hedge on Jul 5, 2017.
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