jueves, 19 de mayo de 2016

jueves, mayo 19, 2016

Things to Watch in the Fed’s April Meeting Minutes

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Federal Reserve officials entered their April 26-27 meeting amid signs that global economic and financial turmoil had eased since the start of the year and the U.S. labor market had continued to strengthen. They left interest rates unchanged and kept open their options on when to raise them next.

The minutes of their gathering, due out Wednesday at 2 p.m. EDT, should shed more light on their internal discussions about global risks, market expectations and inflation data. Here are five things to watch for in the minutes.


                   1 Global Risks
  • One of the most significant changes to the Fed’s policy statement in April was the removal of a reference to the risks posed by global economic and financial developments. The minutes should provide more clues on how Fed officials viewed global conditions, how much conviction they had that the risks had abated and whether they were concerned that new turbulence could erupt should they signal the coast is clear for another rate increase.
     
  •        2 Brexit Vote                                                

  • One worry for some Fed officials is the June 23 referendum in the United Kingdom on whether to leave the European Union. Several have suggested the so-called Brexit vote, scheduled for the week after the Fed’s June 14-15 meeting, could create enough uncertainty or market turbulence to warrant holding off on a Fed rate increase in June. Brexit hasn’t come up at Fed policy meetings yet, according to minutes of previous gatherings, but it wouldn’t be surprising to see a mention this time.



3 Market Expectations

  • Fed-funds futures markets put a 19% probability on a Fed rate increase at its June meeting and a 40% probability on a move July 27. Look for whether officials expressed concerns in April about whether markets were underestimating the Fed’s willingness to follow through with another rate increase this summer if the economy keeps strengthening.


4 Job Market Strength

  • Speaking of data, Fed officials noted in their April policy statement that “labor market conditions have improved further even as growth in economic activity appears to have slowed.” Officials’ public remarks since then suggest they aren’t too worried about the U.S. economy’s sluggish start to the year, but the minutes should give a clearer picture of their assessment at the meeting.

            5 Inflation Concerns

  • As labor markets move close to full employment, the Fed is increasingly focused on inflation, which has been running below its 2% target for four years. Fed Chairwoman Janet Yellen said in March she was wary of relying too much on inflation data from early this year that showed an uptick, and officials warned in their April policy statement that market-based inflation expectations remained low. Look to the minutes for more details about their concerns, but remember that inflation data released since the meeting have shown monthly consumer prices jumping.

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