Fed Warns “Equity Prices Are High”, Sees Low Volatility As A “Risk To Financial Stability”

While the core focus in the June FOMC minutes was on whether and when the Fed would hike next, and/or begin its balance sheet unwind (indicentally, Fed Funds futures now shows odds of another rate hike in 2017 at about 60%), what was perhaps most notable in today’s Minutes was the Fed’s repeat warning about asset prices – something it has cautioned on previously – and the introduction of a warning on low volatility, which the FOMC said could pose “risks to financial stability.” Finally, the Minutes highlighted the biggest paradox facing the Federal Reserve namely the continued easing in financial conditions despite the Fed’s 2 rate hikes so far in 2017.
The sections in question, first on high equity prices:

This post was published at Zero Hedge on Jul 5, 2017.