FOMC Minutes🪜

Hot out of the oven is the FOMC minutes that showed the Fed’s inclination towards quicker interest rate hikes to tame inflation. It includes other monetary tightening policies too. It is almost certain that the Fed will increase the interest rate during the March FOMC. 

One key relief is that most officials believed inflation would continue to moderate over the year. Still, more aggressive action is to achieve a stable price policy in the short term. 

💸Faster rate increase compared to the past⌛️

Interestingly, the minutes compared to the situation in 2015 and the forecast is that a faster pace than those in post 2015-period is warranted if the economy continues to be on track for robust growth or if the inflation continues to stay elevated. 

However, the minute does not hint at any mention of the possible 0.5% rate hike. 

🎢Bond Purchase Operation & Balance Sheet⚖️

Unsurprisingly, the bond purchase will probably end around 10 March 2022, as most participants believed that sticking to their pre-announced plan is more applicable than an early cessation of the plan that could speak the market. 

There were also principles laid out that act as guiding torches for shrinking the $9 trillion balance sheet. The vast amount of the securities holdings is expected to wind down substantially. Yet, the minutes do not show the schedule for such an operation, and it might be seen as a slight dovish stance. 

In a nutshell, the FOMC minutes were probably less hawkish than market participants feared, and the equity market remained stable upon the release of the minutes.