One More Minute – The Latest Fed Minutes
Before every meeting, the Federal Reserve releases their meeting minutes, a detailed record that gives insight into what is going to occur, setting the rationale for the eventual decision. As the market is essentially riding on the Fed’s word at the moment, given inflation is the largest problem, anything from public comments to the minutes are going to sway the markets.
This is precisely why the markets were strange on Wednesday as the Federal Reserve released the minutes for next week’s meeting. In expected fashion, most members believed that small rate hikes would be the way to go, but it is important to note that a few members of the committee pushed for larger rate hikes around 50 basis points, which would mark an increase in the rate of hikes by the Fed. One of these policymakers was Loretta Mester from the Federal Reserve Bank of Cleveland, who said there was a compelling case for a large rate hike due to current economic conditions. Many point to the strong economic factors as a reason for this sentiment, but Fed officials see it most strategic to move in smaller increments to manage risk. Overall, the main inflation threats listed in the minutes were China’s economic reopening, the war between Russia and Ukraine, and the US labor market. Additionally, the minutes showed that the Fed is keeping their eye on the current budget standoff in Congress and the risk of default, which is getting higher and higher every single day. Many members of the Fed are extremely concerned about the negotiations being drawn out over a long period of time and the possible risks to the economy, which could undo all of the work they have been doing in the past year.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
