December FOMC Minutes

The FOMC Meeting Minutes is one of the most irrelevant macroeconomic events, as the market already knows this information. On the 13th of December daddy, Jerome Powell told the world that they would only hike 50bps and that inflation seems to be cooling off. He seemed quite dovish. What was released in the FOMC minutes was quite the opposite.

The meeting minutes showed policymakers are still laser-focused on controlling the pace of inflation and are scared that it might run hotter than anticipated. The team of central bankers is also worried about any misperception in financial markets that their commitment to fighting inflation was cooling off.

Federal Reserve policymakers further warned they would need more evidence of easing inflation before being convinced that price pressures are under control. As a result, in December, the US Central bank raised its funding rate by 50 bps, ending the long string of 75bps increases.

The policymakers said further rate increases are very much necessary; they also agreed that there should not be any rate cuts in 2023. Moreover, they emphasized the need for flexibility and optionality in their decision-making.

It will be a while before they decide to pivot into cutting rates. Till then, there is simply no reason to fight the Federal Reserve and expect higher prices. But I will say one thing; the bottom is near.