'Hakwish' FOMC Minutes Indicate Members' Readiness to Tighten More, Concern Over 'Too Easy' Financial Conditions

Market Trends Since Last FOMC Statement

Since the last FOMC statement was released on May 1st, there has been a significant rally in bonds, stocks, and gold. Crude prices, on the other hand, have seen a decline, accompanied by a slight drop in the dollar.

Rate-Cut Expectations

Expectations for a rate-cut have increased, albeit dovishly, but they are still considerably lower than the post-CPI spike highs.

US Macro Data

US macro data has been consistently surprising on the downside. Both 'hard' and 'soft' data are rapidly deteriorating, with CPI and Retail Sales figures released after the last meeting.

Macro Factors

Macro factors based on growth have weakened significantly since the last FOMC meeting, while those related to inflation have seen an increase.

Expectations and Predictions

With signs of stagflation becoming more evident, it's worth considering what the Fed wants us to infer from the Minutes. Expectations were that rate hikes would be ruled out, the Fed would continue to expect growth without inflation, and the focus would remain on shelter inflation.

Key Takeaways from the Minutes

Some of the key points from the Minutes include:

• 'MANY' are uncertain about the degree of restrictiveness
• 'VARIOUS' participants are willing to tighten more if necessary
• 'A NUMBER' noted the risk of financial conditions being too easy
• Greater confidence in inflation is expected to take longer than initially thought

Developing...

Full Minutes

The full Minutes can be read below:

Thoughts on the Matter

These minutes provide a glimpse into the Fed's current thinking and future plans. The willingness of 'various' members to tighten more if needed and the concern over 'too easy' financial conditions are particularly noteworthy. What are your thoughts on these developments? Do you agree with the Fed's current stance and potential future actions? Share this article with your friends and discuss it with them. And don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.