The Fed's minutes offer a positive light on the regime change and the escalation of the US dollar

Fed discussion points:

  • The January FOMC report revealed that policymakers voted unanimously to keep rates unchanged
  • Discussion around the "patience" facing rate hikes due to a sense of uncertainty about the impact of the US-China trade war and the closure of the US government on short-term growth
  • Read a detailed analysis of the latest FOMC rate decision right here

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The minutes of the January meeting of the Federal Open Market Commission were released on Wednesday, providing an overview of the central bank's recent regime change. Recent fundamental obstacles such as the US-China trade war and the US government shutdown have prevented further increases. In January, policymakers unanimously decided to keep rates in their current range of 2.25% to 2.50%. Despite the unanimous vote, uncertainty remained on the way forward.

Clarification of the exact pace of the next hikes was highly anticipated. After the information meeting, participants raised a number of questions regarding market information indicating that the balance sheet balance of the Federal Reserve and the associated "quantitative tightening" had been a significant factor contributing to the liquidation. stock markets in the last few months of last year " the minutes highlighted.

Conversely, some participants argued that further rate increases would be appropriate in 2019 if the US economy evolves as expected. A number of decision makers also commented on possible language changes. "Many participants pointed out that if uncertainty diminished, the Committee should re-evaluate the characterization of monetary policy as a" patient "and could then use different wording for the statements." The comments highlight the constant threat posed by trade wars and national developments to the Fed's political trajectory.

On the record, Fed officials emphasized that the FOMC would be flexible in its approach to balance sheet standardization. "The survey results also suggested that respondents anticipated that the committee would slow down runoff from the balance sheet in scenarios involving a reduction in the target range of the federal funds rate," the committee said. In addition, the minutes revealed that Fed staff had given options to end runoff from the balance sheet in the second half of 2019. Almost all officials were in a hurry to stop runoff later this year.

US dollar price chart (DXY): one-minute deadline (February 20, 2019) (Chart 1)

US Dollar Price Diagram FOMC Minutes

The dollar was trading up after the minutes, up about 96.00 from the pre-publication level of 95.80.

Check back for updates as the story develops …

– Written by Peter Hanks, Junior Analyst for

Contact and follow Peter on Twitter @ PeterHanksFX

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