FOMC Minutes Show Fed Is Ready To Tighten Policy If Necessary

Vladimir Zernov
Updated: May 22, 2024, 20:50 GMT+00:00

Key Points:

  • Fed members believe that the disinflation process would likely take longer than previously expected.
  • Some members are ready to raise rates if necessary.
  • Longer-run equilibrium rates may be higher than previously thought.
FOMC Minutes

In this article:

On May 22, 2024, Fed released FOMC Minutes from the last meeting. The Minutes showed that Fed members remained highly attentive to inflation risks.

Nevertheless, Fed members continued to expect that inflation would return to 2% over the medium term, although the recent data had not increased their confidence in progress towards the inflation target. The disinflation process would likely take longer than previously expected.

The Minutes showed that Fed members did not expect that it would be appropriate to reduce the target range until they have gained greater confidence that inflation was moving sustainably towards the 2% target. The same message has been reiterated by Fed officials in recent days.

Overall, the Minutes did not reveal anything new, although they showed that some members were ready to raise rates if necessary.

U.S. Dollar Index is moving higher as traders react to FOMC Minutes. Currently, U.S. Dollar Index is trying to settle above the 105.00 level.

Gold is under strong pressure as traders focus on stronger dollar and continue to take profits near historic highs. Gold is down by 1.7% amid a broad sell-off in precious metals markets.

SP500 pulled back below the 5300 level as traders reacted to the Minutes. Profit-taking served as a material catalyst for the move. In addition, some traders view the Minutes as more hawkish than expected.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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