The minutes of the FOMC meeting that took place in September have just been released. The release brought no big surprises. While the minutes are “hawkish,” investors were expecting that portrayal. At the last meeting, the Fed raised interest rates by 75 basis points to 3% to 3.25%, the third straight hike of three-quarters of a percentage point and taking borrowing costs to their highest levels since 2008. The so-called dot plot shows that interest rates are likely to hit 4.4% by December, up from the 3.4% forecast in June and rising to 4.6% next year.
Here are the key takeaways from the document:
Many participants stressed that the cost of doing too little to bring down inflation is greater than the cost of doing too much.
Some policymakers indicated that once the policy had reached sufficiently restrictive levels, it would be appropriate to keep it in place for a period of time.
Many participants commented on the federal funding pathway needed to meet the Committee’s goals.
Participants agreed that at some point it would be appropriate to slow the pace of rate hikes while assessing the cumulative impact of policy adjustments.
Fed officials concluded that they must adopt and maintain a more restrictive monetary policy stance to meet their goal of bringing down elevated inflation.
EURUSD – Market reaction to today’s FOMC minutes is negligible. The most popular currency pair continued to trade below the 0.9700 level. Source: xStation 5
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