Please see below article received from EPIC Investment Partners this morning, which reviews the FOMC minutes from the January 30/31 meeting.
The FOMC minutes from the January 30-31 meeting revealed little on monetary policy direction. The minutes reiterated the Fed’s intention to wait for “greater confidence” in inflation moving sustainably towards a 2% target and emphasised the need for patience. Only a “couple” of officials seemed inclined to cut rates earlier due to the current restrictive policy stance compared to their colleagues.
The minutes stated: “Most participants recognised the dangers of easing policy too hastily and stressed the need to carefully evaluate incoming data to determine if inflation is consistently moving towards 2%. However, a couple of participants highlighted the economic risks of maintaining a too restrictive policy for an extended period”. This was echoed in the press conference when Powell was asked about the possibility of a March cut: “that’s probably not the most likely case or what we would call the base case.”
Furthermore, the minutes highlighted the progress towards the Fed’s dual mandate but cautioned that economic uncertainty could jeopardise this progress. “Members judged the risks to achieving the Committee’s employment and inflation goals were moving into better balance. Members considered the economic outlook uncertain and concurred that they were highly attentive to inflation risks.”
Regarding inflation, the minutes detailed several risks, noting that the committee “saw inflation’s upside risks as diminished” but observed that inflation remained above the Committee’s longer-term goal. Some participants worried that progress towards price stability might halt, especially if demand increased or the healing of the supply side slowed more than anticipated. However, they also noted downside risks to inflation and economic activity, including geopolitical risks that could significantly reduce demand, potential adverse effects from slower growth in certain foreign economies, the risk of prolonged restrictive financial conditions, or the impact of weaker household balance sheets on consumption deceleration more than expected.
Lastly, if you have ever thought about writing a book and want to be around like-minded people, then Iceland is your place. About one in 10 Icelanders publishes a book in their lifetime; by comparison, in the US only one in 5,000 have. The average Icelander reads more than two books a month. Remarkably, a blockbuster title can sell as many as 14,000 hardback copies in a country with a population of just 375,000. One reason for the prolific writing could be the country’s ancient storytelling tradition, going back some 800 years to the Icelandic sagas.
Or it could just be needing something to do during those long 21-hour winter nights.
Please check in again with us shortly for further relevant content and market news.
Chloe
23/02/2024