January FOMC Minutes Preview - Rate Discussion And QT Contours In Focus

We've just published our preview of the January 30-31 FOMC minutes - PDF link below.

• The immediate focus in the minutes (out Weds Feb 21, 1400ET/1900GMT) will be on participants' thinking surrounding the prospect for future rate cuts - both timing and magnitude.
• The minutes will also be scrutinized for any discussion surrounding the timeline and contours of a potential slowing of asset runoff and how soon a decision may be reached.
• Of note will be whether the Minutes therefore affirm the December Dot Plot, which implied 3x 25bp cuts in 2024, as providing a reasonable guide to the Committee’s current thinking. While cuts are likely still on the table if inflation roughly aligns with trend in the coming months, the downside rate risk is likely to be limited absent concomitant downside surprises in the inflation data. In other words, we would not be surprised to see the Committee’s discussed approach as being “cautious” and/or “patient”.
• We assess FOMC participants' commentary since the January meeting, alongside sell-side expectations for what to watch for in the Minutes.

PDF LINK BELOW

FedMinutesPreviewFeb212024.pdf