FOMC Minutes Show Fed Stays Cautious

Vladimir Zernov
Published: Feb 21, 2024, 19:29 UTC

Key Points:

  • FOMC Minutes indicate that economic forecasts improved compared to December projections.
  • Fed believes that total and core PCE inflation would decline in 2024.
  • Fed members want to gain more confidence before they would be ready to start the rate cut cycle.
FOMC Minutes

In this article:

On February 21, 2024, the Federal Reserve released the minutes of the Federal Open Market Committee meeting that was held on January 30 – 31.

FOMC Minutes showed that the economic forecast prepared by the staff for the January meeting was slightly stronger than in the December projections. However, the lagged effects of previous rate hikes were still expected to push output growth in 2024 and 2025 below the staff’s estimate of potential growth.

According to the economic forecasts, total and core PCE inflation were expected to decline in 2024 and settle close to the 2% target by 2026. Fed members believe that consumption growth would moderate this year, especially in the low – and moderate-income categories.

Fed members noted that it would not be appropriate to reduce the target range until they gained confidence that inflation was moving sustainably towards 2%.

Overall, FOMC Minutes contained no surprises. The Fed will act carefully as it is afraid to start cutting rates too soon. At the same time, there are no hawkish news.

U.S. Dollar Index pulled back below the 104 level as traders reacted to FOMC Minutes. Treasury yields declined from session highs as bond traders did not see anything new in the Minutes.

Gold remained stuck near the $2025 level. Fed policy outlook is extremely important for gold markets. However, FOMC Minutes did not provide additional clues for gold traders.

SP500 remained under pressure after the release of FOMC Minutes. Traders focus on the sell-off in the tech sector ahead of NVIDIA’s earnings report.

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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