The minutes from the meetings of the Federal Reserve’s monetary policy setting committee, the Federal Open Market Committee (FOMC), are regularly released three weeks after the meeting and provide a more detailed view of the deliberations than the statement released at the conclusion of the meeting.
The most valuable insight from the minutes of the June meeting is that all but one member of the committee agreed that more evidence would be necessary to be confident that economic growth, the labor market and inflation are strong enough to justify raising the federal funds rate, the beginning of monetary policy normalization. Most members also believe that evidence is likely to support a decision to increase the funds rate by the end of the year.
While Fed officials have made clear the timing of the first increase will be data dependent, not calendar driven, the calendar has some sway over the data that will be available over the course of the next several FOMC meetings. Relatively little information will have been added to what was known at the June meeting by the July 28-29 meeting. In contrast, by the September 16-17 meeting, the advance estimate and first revision of GDP growth in the second quarter will be available, the Labor Department’s jobs reports will be available for an additional three months, and inflation indicators for at least two additional months will have been released.
More broadly, the committee judges that economic conditions continue to improve and that the worst of the downward pressure on inflation from declining energy prices, as well as import prices from a strong dollar, appears to have abated. However, the impact on growth from the uncertainty surrounding negotiations between Greece and its creditors, and a slowing Chinese economy remain concerns.
The current consensus among analysts is for the first increase to come at the September meeting. By that time developments in domestic and global economies will have been strong enough to justify increasing rates, or else weakened to a point where all bets are off for an increase this year.