FOMC minutes: A few participants favored raising rates by 50 basis points

The first FOMC Minutes in 2023 has been released with investors searching for further insights into the near-term path for policy and any comments regarding the possibility of the Federal Reserve going back to 50 bps hikes.

The US Dollar ran higher from a new low at 104.25 in the US trading session in anticipation of a hawkish outcome ad sat at 104.35 moments ahead of the release. DXY is moving up to fresh highs on the prospects of a 50bp rate hike next time around.

This week’s stock market selloff showed how anxious investors are about the Fed’s thinking on interest rates. On Wednesday, they could be calmed down or get more and more anxious, depending on what they the minutes will reveal.

Key Quotes

A few participants favoured raising rates by 50 basis points.

All participants agreed more rate hikes needed to achieve Federal Open Market Committee’s job, inflation objectives.

Participants said restrictive monetary policy needed until Fed confident inflation falling to 2%; added that process likely to take ‘some time’.

All participants favored further fed balance sheet reductions under current plan.

Participants said uncertainty associated with outlooks for economy, job market and inflation was ‘high’.

Participants saw upside risks for inflation, including china’s economic reopening and Russia’s war in Ukraine.

Participants said risks to economic outlook weighted to downside.

A number of participants said drawn-out US debt limit process could pose ‘significant risks’ to the financial system, economy.

Participants said job market ‘very tight,’ labor demand outstripping available supply.

Participants said continued tight job market would contribute upward pressure to inflation.

Participants said inflation in last three months has eased, but they need to see more progress.