Fed Minutes Will Bring Insight into Yellen’s Comments

Whether they reveal anything new or just nuance, the minutes from the Fed’s last meeting will be a major highlight of the trading week when they are released Wednesday afternoon.

Traders are watching to see if the minutes take on a more hawkish tone, particularly after Fed Chair Janet Yellen said during her March 19 press briefing that the Fed could start raising short-term interest rates about six months after ending its bond-buying program, expected in the fall.

“I think that was a mistake,” said Stephen Stanley, chief economist at Pierpont Securities. Since that comment, some traders have taken it as a misstep by the new Fed chair, and Fed officials have been vague about the timing of their move away from a zero fed funds rate. But the remark did initially jar markets, and immediately sent stocks lower, and bond yields and the dollar higher.

Stanley said he will be most interested in the views of the Federal Open Market Committee members on the changes in the actual language change in the statement.
“For me, I think the most interesting potential news item in the minutes will be the recap of the discussion of the changes in forward guidance,” he said. “I’m interested to see if there was any dissent or varying opinions about the lower for longer statement … was there a contingent of folks that were uncomfortable with the piece of the statement that said they would keep rates well below normal for a long time even after they start to raise them?”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza