The minutes of the June Federal Reserve FOMC meeting are due on Wednesday July 4 at 2pm US Eastern time, 1800 GMT.
Preview thoughts, in brief, via BMo:
- the official communication will help refine expectations around a hike in July and the path toward the 5.75% upper bound implied by the SEP
- The balance of risks regarding the hike/no hike debate is far closer to equilibrium than it has been this cycle – and the Minutes will offer clarity on policymakers’ views of the weightings associated with each variable influencing the policy outlook.
- We expect the release will address the absence of evidence pointing to a material impact from the regional banking volatility and emphasize the need for a more measured pace of tightening given we are only at the beginning stages of when we would begin to see the lagged impact of restrictive policy rates as we heard from Powell at the press conference, on Capitol Hill, and in Portugal last week.
- In evaluating the current balance of opinions on the Committee, it is notable that even Fed President Goolsbee — one of the most dovish voters on the FOMC and a persistent advocate of patience in assessing the effects of tighter policy conditions — is unsure about whether or not he will support a hike in July.
- With market pricing strongly favoring a 25 bp increase later this month, the fact Goolsbee is unable to rule out a move higher in policy rates reinforces the mantra of data dependence, and how broadly unconvinced Powell & Co. are that inflation has demonstrated a sufficient downward trajectory.
- Policymakers have continually identified services inflation as a facet of the economy that has shown little sign of easing; though on Friday, Goolsbee said “The thing that everybody should put their eye on in the immediate term are goods prices.”
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The FOMC July meeting is on the 25th and 26th. The July 12 CPI report is a big one ahead of the meeting – as mentioned above eyes on services inflation.