FXStreet (Edinburgh) – Jim Reid, Analyst at Deutsche Bank, gave his opinion on the recently published FOMC minutes.
Key Quotes
“EM woes and continued falls in Oil continue to hit sentiment”.
“Interestingly the Fed’s minutes refer to the July 28-29th meeting before the Chinese devaluation and associated more recent EM troubles”.
“Oil is also down over 15% since they last met. Even with what they knew then it would be hard pressed to say that the committee had high conviction that September was the right month to start the hiking cycle”.
“The minutes said that “Almost all members” indicated that “they would need to see more evidence that economic growth was sufficiently strong and labor markets conditions had firmed enough for them to feel reasonably confident that inflation would return to the Committee’s longer-run objective over the medium term”.
“Added to that was the comment that ‘it was noted that considerable uncertainty remained about when wages might begin to accelerate and whether that development might translate into increased price inflation’. This certainly feels more dovish to how the market interpreted the statement when it originally came out”.
“Despite that, without committing to timing the Fed are still clearly keeping options open and the hawks will point towards the statement that most participants ‘judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point’.
(Market News Provided by FXstreet)