FOMC Minutes Confirm Hawkish "Transitory" Inflation Outlook, Remains "Patient For Some Time"

Will the Minutes attempt to walk back Powell's 'hawkish' transitory/transient inflation comments, will they mention frothy prices in financial markets, or will an insurance rate-cut be discussed against trade-war threats?

The answer is mixed:

Hawkish

MANY FED OFFICIALS SAW INFLATION DIP AS LIKELY 'TRANSITORY'

Dovish

*FED OFFICIALS SAW PATIENT APPROACH APPROPRIATE FOR 'SOME TIME'

Key takeaways include:

"Patient" Fed for "some time"

"Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time, especially in an environment of moderate economic growth and muted inflation pressures, even if global economic and financial conditions continued to improve."

Inflation remains "Transitory"

"Many participants viewed the recent dip in PCE inflation as likely to be transitory, and participants generally anticipated that a patient approach to policy adjustments was likely to be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective."

On a symmetric "overshoot" in inflation

"Several participants commented that if inflation did not show signs of moving up over coming quarters, there was a risk that inflation expectations could become anchored at levels below those consistent with the Committee’s symmetric 2 percent objective—a development that could make it more difficult to achieve the 2 percent inflation objective on a sustainable basis over the longer run."

Meanwhile, risks are declining ...

"A number of participants observed that some of the risks and uncertainties that had surrounded their outlooks earlier in the year had moderated, including those related to the global economic outlook, Brexit, and trade negotiations."

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