Investors will be able to see how dovish or hawkish Fed officials have been in recent months based on the FOMC minutes, which are scheduled for release today. Today will see the release of the Federal Reserve’s January FOMC meeting minutes. On Wednesday, February 21 at 2:00 PM ET, the FOMC meeting minutes will be released to the public — the meeting minutes, which could provide insightful information about the ongoing debates around interest rates this year.
Bill Adams, Chief Economist for Comerica Bank says, “The minutes of the Federal Reserve’s January Federal Open Market Committee meeting may clarify how much more ‘good data’ the Fed’s policymakers want to see before starting to reduce interest rates. Chair Powell said at the press conference following the January decision that he saw a March cut as unlikely, but was uncharacteristically vague about exactly what the Fed’s preconditions for cuts are; this suggests FOMC members still disagree about the issue. The minutes are also likely to shed light on the discussion planned for the March meeting about slowing the pace of the Fed’s balance sheet reduction.”
The Federal Reserve made it clear at the previous meeting that they would not cut interest rates unless they witnessed a decline in inflation. On the other hand, recent consumer price index (CPI) data indicates that inflation is not declining as rapidly as anticipated.
Mixed economic signals are pouring in from the economy that may lead to some drastic action by the central bank if the situation deteriorates. Retail sales decline in January, largely due to winter conditions, prompted expectations of a rate cut in the first half of 2023, with a 44% likelihood of a May cut.
Unexpectedly high US inflation data for January could make the Federal Reserve postpone its monetary easing program. The US Consumer Price Index (CPI) for January fell less than predicted, coming in at 3.1 percent, although the core figure unexpectedly remained unchanged at 3.9 percent. Therefore, the Fed rate cut may begin sometime in July and not earlier, which is what the market is expecting now.
The Fed has held interest rates unchanged at 5.25% to 5.5% range. Market participants await FOMC meeting minutes and speeches from Fed officials to understand the Fed’s stand on policy easing and potential rate cuts later in the year. The 24-month inflation battle could be at its fag end but the US Fed knows that the victory lap is still some distance away.