BREAKING: FOMC Minutes do not change the picture of monetary policy in the US

7:19 PM May 25, 2022
  • All voted in favor of 50bp hike
  • Fed believes several more hikes will be needed (there is already a softening tone, however)
  • Risks to inflation pointed upward
  • Fed expects solid real growth in Q2 and growth near or above trend throughout the year
  • Some members were in favor of selling MBS (hawkish!)
  • Fed indicates clear direction of normalization, it is not ruled out that policy will become restrictive (rates above neutral)
  • Several members are concerned about government bond liquidity and that tightening may also affect the private sector (dovish) 
  • Sveral members indicate that high prices are depressing sales, recent data suggest that price pressures may already be starting to ease (dovish)

Minutes report was balanced. On the one hand, the Fed is considering selling MBS and assumes the possibility of a restrictive monetary policy. On the other hand, even before the balance sheet reduction begins, the Fed is worried about liquidity in the bond market. At the same time, the Fed sees signs of an inflation peak. But should we believe it? It is worth remembering that for almost a year the Fed has been telling us that inflation is temporary. On the other hand, it may want to look for a wicket to pull back from its course. Either way, the market is reacting very weakly, but after the initial minimally positive reaction we see a return to declines on indices and we see a stronger dollar.

US100 Index, M15 interval. FOMC minutes triggered a mixed reaction on the technology companies index. At the moment, US100 is holding 0.86% higher. Source: xStation 5

Start investing today or test a free demo

Open real account TRY DEMO Download mobile app Download mobile app

Forex and CFDs are leveraged products and can result in losses that exceed your deposits. Please ensure you fully understand all of the risks.

Losses can exceed deposits