- Bankers saw only limited progress in the decline in core inflation after excluding housing inflation
- Bankers noted that further policy tightening would be appropriate if data indicated insufficient progress toward the inflation target
- Gold continues declines after the release of the minutes, the dollar gains slightly, stock indices do not react to the report
As can be seen from the minutes of the latest FOMC meeting released at 20:00, bankers unanimously agreed that keeping interest rates unchanged is advisable at this stage of the cycle. On the other hand, all bankers said that rates should be kept at higher levels for a longer period of time and that further decisions need to be taken carefully. Keeping rates at the current level will help bankers gain time to learn new macro data, which will play a key role in further decisions. If the inflation-fighting process is not satisfactory, bankers have declared their willingness to raise interest rates further (especially in the context of bringing down core inflation without the housing inflation).
"Risks to the inflation outlook were seen as tilted upwards, given the possibility that inflation could prove more persistent than expected or that there could be further adverse shocks to supply conditions." - the Minutes added. It is worth mentioning that at the time of the decision, the CPI inflation reading for October, which came in well below expectations, was unknown.
Following the publication of the Minutes, the money market valuation of the further path of interest rates remained unchanged. The first full cut is priced for May 2024.
Looking technically on the EURUSD, quotes, are in retreat today. Nevertheless, just after 7:00 pm GMT no major movement is seen. Shortly after the publication, the price moved downwards, but losses were quickly erased. Nevertheless, if the downward sentiment seen since the morning is maintained, a test of support at 1.0890 or 1.0866 is not excluded.
Source: xStation5
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