JPM on the Fed minutes.
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The main messages from the July FOMC meeting minutes were the same ones that Powell conveyed after the meeting: Ongoing increases in the funds rate would likely be appropriate, the pace of hikes would slow “at some point,” and the Committee will be data dependent in determining when that slowing occurs. No quantitative guidance was offered as to the size of the move at the next meeting, or the likely level of the funds rate further down the line. The Committee had a lengthy discussion of risk management in the setting of monetary policy. In that context it was noted that tightening by more than necessary was “a risk,” but also noted that allowing inflation to become entrenched was“a significant risk.”Even with appropriate monetary policy it was judged that it would take“some time ”to return to 2% inflation. We still see the Fed hiking 75bp at the next meeting, though also see a risk of 50bp if jobs growth slows notably in the next report. We continue to see a cumulative 125bp of hikes by year-end.
