Where Are We Left After the FOMC Minutes?

Posted Thursday, October 13, 2016 by
Skerdian Meta • 2 min read

Finally, we had a chance yesterday to look at what went on during that last FED meeting in September. Honestly, I wasn´t really looking forward to these FOMC meeting minutes because we already know what we need to know; the FED will most likely hike the interest rates in December. There´s no statement following the November meeting and it is less than a week before the elections on the calendar, which makes it almost impossible to see a rate hike then.  

Still, it´s always fun to hear the reasons and the logic behind the action in such meetings. Basically, the minutes were in line with the statement that we received after the FOMC meeting. There are risks to inflation and economic growth, both domestically and globally, as always. But in general according to the minutes, the US economy is on the right path, hence the rate hike in the following meetings. 

The fact that stood out for me was that some of the FED members wanted to hike the interest rates in September. I have been in favour of a rate hike for months now, but hiking in September wasn´t the right timing for me. The US economic data during most of September showed a steep decline in the economic activity, so it came as a bit of a surprise. 

The minutes showed that a September hike was a close call. That means that we will definitely see the FED hike rates in December. Now the odds have gone up to nearly 70%. That´s as close to a rate hike as possible.

What does that tell us about the USD? Well, obviusly I expect the buck to remain upbeat during the next two months, unless we see the US economic data turn sharply lower. But I don´t think that will happen; the economic situation in the US, in Europe and in the emerging economies is improving, so if there is a risk it lies on the upside in my opinion. I think that in the following months it´s more likely that we see the economic recovery pick up pace. rather than the opposite. 


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