BMO Capital Markets Economics says “It’s still looking like September lift-off.” See three key points in the Minutes from the April 28-29 FOMC meeting:First, appetite for June lift-off is waning. “A few anticipated that the information that would accrue by the time of the June meeting would likely indicate sufficient improvement in the economic outlook to lead the Committee to judge that its conditions for beginning policy firming had been met.” “Many participants, however, thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility.”Second, the FOMC is not completely convinced that economic weakness in Q1 only reflected temporary factors (weather, ports’ labor disruptions, wonky seasonal factors). “A number of participants suggested that the damping effects of the earlier appreciation of the dollar on net exports or of the earlier decline in oil prices on firms’ investment spending might be larger and longer-lasting than previously anticipated.”Third, the FOMC is a bit worried about a repeat of the “taper tantrum”. “Some participants noted the possibility that, at the time when the Committee decides to begin policy firming, term premiums could rise sharply–in a manner similar to the increase observed in the spring and summer of 2013–which might drive longer-term interest rates higher.” However, this worry appears unlikely to prevent liftoff.
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