US Economic Perspectives: FOMC minutes: 12-0 vote; split participants

Research evidence excerpt

US Economic Perspectives: FOMC minutes: 12-0 vote; split participants

hold or lowering rates this year. Perhaps not surprisingly, the participations whose

outlook scenario was persistently higher inflation were also the participants who

thought rate hikes this year would be appropriate.

Overall, that division among the participants was what we saw in the June SEP, except

that the Chairman did not submit a dot or reveal where his views stood. The meeting

minutes released today simply had "many" versus "many" rather than suggesting he

tilted the scales to make one path ahead (hiking this year versus not hiking this year) a

"majority" or "most." The structure of the minutes was pretty similar otherwise,

although we can see the new special advisors in attendance, and the Chairman is noted

as describing his task forces, but with little added detail. However, with the

consideration of scenario analysis, we note that Warsh's own Chairman, Ben Bernanke,

has commented substantially on central bank communications, touting "scenario

analysis," and would in our view be a logical task force head.

FOMC meeting discussion details

A "few" participants judged that the incoming data and balance of risks could have

justified a rate increase at the June meeting: "A few participants commented that, in

light of these developments, there was a case for raising the target range for the federal

funds rate, but those participants indicated that they supported maintaining the current

target range at this meeting. Several participants remarked that they did not see the

current policy stance as restrictive, while a few other participants commented that they

saw the current policy stance as slightly restrictive." This reflected continued concern