FXStreet (Edinburgh) – Kit Juckes, Strategist at Societe Generale, has evaluated yesterday’s FOMC minutes.
Key Quotes
“The ability of the current Federal Reserve leadership to find reasons not to lift rates up and away from the zero bound, is well documented”.
“The FOMC minutes read like a discussion of reasons for inaction against a background of knowing that the time for the first hike is approaching”.
“Concerns about China were cited even before the CNY adjustment and the most recent slide in equity prices”.
“Uncertainty about when wage growth would pick up is fair enough, but references to soft commodity prices and the strong dollar smack of continued nervousness about going too soon”.
“None of this makes a September hike impossible and indeed, most economists who though September likely before the minutes still do this morning, but their nerves are just a little frayed”.
“And away from the precise timing of the first hike, the crystal clear message is that the rate hiking cycle will continue to be exceptionally cautious long after the first move is finally made”.
“If the build-up to that move feels like Chinese water torture, then hopes of some cathartic release when action is finally taken, may be over-optimistic”.
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