FOMC Minutes Eyed For Debate On Lags, Inclination To Tighten Further

Today's minutes for the July FOMC meeting (out 1400ET/1900UK, our review of that meeting is here) are unlikely to provide any major revelations. Market-impactful commentary has been hard to come by in recent editions, and the meeting was held before the July payrolls and (more impactfully) inflation data. More attention will be paid to policy signals emanating from the Jackson Hole symposium next week. There are still areas to watch though including:

• How "live" the debate over the 25bp July hike was (ie any non-voting dissenters) - when asked about this, Powell said “I would say there's a range of views on the committee, and when you see the minutes in three weeks you'll see that. There's a range of views about what we should do at this meeting and what we should do at the next meeting and it's a process that we go through.” Indeed as the FOMC comes closer to the end of the tightening cycle, the fissures should become increasingly apparent in the minutes, if not quite in the votes.
• How the debate around policy lags is evolving, with the hawkish camp concerned that short lags mean most of the impact of monetary tightening is in the past and more may need to be done, and vice versa with the more dovish members. The minutes will probably emphasize a cautious, data-dependent approach, per Powell's tone at the July press conference.
• Related, while it's unlikely, any new discussion on the inclination of the FOMC to hike at least one more time, as was indicated in the June SEP Dot plot median, and/or to what degree policy is already seen as restrictive.
• More color on the staff's retraction of its forecast for recession later this year, which Powell acknowledged at the press conference