FOMC meeting minutes are to be closely watched by global investors today

The minutes of the meeting released by the US Federal Open Market Committee (FOMC) is a closely watched event among global investors. The minutes of FOMC’s meeting that took place on January 31 – February 1 is to be released today February 22 at 2 p.m. Market participants including investors, analysts, and economists are keenly awaiting the release of FOMC meeting minutes today for further clues on the central bank’s rate-hike path.

The US Federal Reserve’s policy-making committee’s members’ perspectives on the bank’s likely endpoint and the potential direction the federal funds rate may go in the next weeks or months are to be revealed in detail in the minutes of the January 31 – February 1 FOMC meeting.

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On February 1, the Federal Reserve increased its benchmark interest rate by a quarter of a percentage point, taking the target range to 4.5% – 4.75%, the highest since October 2007. Still, there are a few signs that this cycle of rate increases is coming to an end. Fed Chief Powell has already indicated that rates will remain higher for a longer period than expected earlier.

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The reason for that could be that even though inflation is showing a cooling effect, the job sector is strong and the retail US sales data also shows the economy is resilient. Each of these could increase inflation once more and complicate the job of the Fed.

The US CPI data for January released on February 14 showed inflation cooling down marginally. From 6.5% in December, the annual inflation in January fell to 6.4%. And, according to monthly job figures, the US added 517,000 jobs in January, and the jobless rate dropped to 3.4%, the lowest level in 53 years.

A hotter-than-expected US inflation rate stoked worries of an even higher Federal Reserve for a longer period of time. The most recent Fed commentary also demonstrated that decision-makers favoured more rate rises. By the time inflation seems to be under control, the terminal rate, according to the markets, will be more than 5%.

Stock values and earnings both decline in a rising rate environment. Equities depend on the expansion of corporate earnings, which appears to be slowing down in an environment of rising rates. Markets, therefore, may remain volatile over the next few months at the least.