- The decision to hike 75 bps in July was unanimous
- Lower commodity prices need not negatively affect inflation
- Most of the tightening effect will be seen further down the road
- Fed members indicate that lowering consumption must play a key role in beating inflation
- The Fed expects the unemployment rate to rise in the second part of the year
- The Fed indicates that there may be slower hikes at some point
- Many Fed members indicate that there is a risk of tighter tightening than needed Interest rates will soon enter restrictive levels and will remain there for a long time
- US Rate Futures price in higher probability of 50 bps hike in September to nearly 60% following Fed Minutes
Overall, one does not see in these minutes the stronger hawkishness that the market was hoping for just a few hours ago. Of course, there is no clear indication in the minutes that the Fed will slow down its hikes, but on the other hand, one can see the appearance of preoccupation with high rates. The dollar is losing slightly after the decision, and Wall Street futures are rising. The market is now pricing in a greater chance of a 50bp hike than a 75bp hike.
EURUSD rebounds after the release of the FOMC minutes. The tone is rather neutral with a slight dovish bias. Source: xStation5
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