Fed Minutes May Provide Clues on Bond-Taper Timeline, Inflation Outlook

Fed Minutes May Provide Clues on Bond-Taper Timeline, Inflation Outlook

WASHINGTON, July (Reuters) – The Federal Reserve’s June policy meeting in June sparked debate over when and how to reduce its support for the US economy recovering from the coronavirus outbreak, and its release a few minutes later on Wednesday could unexpectedly raise inflation. How fast that discussion is evolving on. The June 15-16 meeting of the Federal Open Market Committee saw the US Federal Reserve move toward a global pandemic outlook, dismissing the chronic coronavirus as an obstacle to the economy, and speaking in the words of Fed Chair Jerome Powell, “When monetary policy shifts.” 

The beginning of this discussion, with higher interest rates showing interest rates by 2023, gives investors the expectation that the Fed will still move faster than expected to end its support for the economy, which has been hit by high levels of unemployment and, now, rising inflation. Long-term treasury yields were close to five months and the gap between them and short-term yields narrowed, which is associated with skepticism about the outlook for long-term economic development. In this regard, Cornerstone macro analyst Roberto Perili recently wrote, “The market sees the Fed move as poor, which is considered detrimental to the long-term prospects for the US economy, with the Fed’s stated commitment to face the expected inflation.”

The minutes, which are due to be released at 2:40 p.m. EDT (1800 GMT), may highlight the urgency of a meeting that raised concerns about inflation or financial stability, even after discussions on policy changes have stalled. .

Speaking to reporters after last month’s policy meeting, Powell said it was too far-fetched to raise interest rates overnight from current near-zero levels to Fed criteria. He said, however, that the Fed would begin a “meeting-by-meeting” assessment of how to reduce its monthly purchases of treasury bonds and non-mortgage securities by $ 120 billion and how it would announce its plans. He said the U.S. economy was still “one way” away from progress in creating jobs that the Fed wants to see before it cuts its asset-purchasing program, which helps reduce costs for households and companies and supports the recovery of more affordable homes. Purchase of cars and similar things.