FOMC Minutes Recap & Highlights

The much-anticipated FOMC Minutes release from the 31 July FED meeting has come and gone, with little fanfare. While central bankers typically talk in vague terms, today’s memo was a comparative work of art. With the world searching for any signals of coming policy moves, cryptic terms like “flexible” and “uncertain” won the day. 

Thus far, there hasn’t been a whole lot of market fallout. However, we may be looking at an active period on Wall Street ahead of the closing bell.

FOMC Minutes: Recap & Highlights

Today’s theme has been “mid-cycle adjustment.” Simply put, this means that the odds of the 31 July rate cut becoming a “one-off” have expanded substantially. For the time being, we are seeing modest action in the markets, but one gets the feeling that is soon to change.

Here are a few of the key points from this afternoon’s FOMC Minutes:

• Several officials stressed the need for “flexibility”
• Two policymakers preferred a ½ point cut at the 31 July meeting
• “Several” members favored holding rates static
• Officials that supported the cut cited concerns over a decelerating U.S. economy and elevated risks facing the global economy as well as the persistent lack of inflation
• “Several” officials expressed concerns over uncertainties surrounding the efficacy of extended quantitative easing

Bottom Line: Currently, there appear to be some growing divisions within the FED as evidenced by the FOMC Minutes. Some members favor a cautious approach to further cuts, while others view a more aggressive path as being appropriate. At this point, it looks like we are back to the ambiguously “flexible” theme of early 2019.