FOMC Minutes: JPM Eyes Restrictive Rates; ING Sees Nerves (3/3)

JPM: While the minutes "didn’t provide much in the way of specific numerical guidance on the likely path of policy", there was "broad consensus that the stance of policy...would need to go further into restrictive territory".

• Some on the FOMC didn't see the real stance of policy as neutral yet, and some "felt that once rates got to a sufficiently restrictive level they would need to stay there “for some time,” in contrast to market expectations for a reversal in the direction of policy next year."
• JPM noted that the minutes described "a number of interest-sensitive sectors were beginning to slow in response to the Fed’s policy tightening" and that "while it was generally believed that “the bulk of the effects” had yet to show up in economic activity, some on the Committee noted that the speed of monetary policy transmission appeared faster than in the past."

ING: The minutes offer signs "some officials are getting a little nervous that they could end up going too hard and may need to reverse course eventually".

• "The Fed thinks that real rates are still too low, even as they deem the nominal fed funds rate as being now at a neutral level", and "seems to be all over the place when assessing where financial conditions are."
• ING is still eyeing 50bp hikes in Sep and and Nov, with a further 25bp in Dec, though "if we got another 350k jobs print for August and CPI failed to show any moderation from the 8.5% headline and 5.9% core then we would likely switch to a 75bp call for September"