June FOMC Minutes: Analysts Look For Degree Of Division On Decision

BofA: The June FOMC Minutes [out Wednesday July 5 at 1400ET] are likely to “elaborate on comments Chair Powell made to Congress and at Sintra....we expect the minutes to elaborate on [characterizing the June decision as a "pause"] and show that members agreed to slow the pace of hikes, while still thinking more hikes were appropriate.”

• The minutes “will show more disagreement over the [June] decision. Additionally, we think the Minutes will show that many participants desired to maintain maximum optionality around the future path of monetary policy, which can help explain the hawkish guidance despite not hiking in June.”

Citi: The minutes will likely “reflect a committee split between hiking further and pausing, which ultimately led to a "hawkish skip". A July rate hike is already expected and priced-in. The timing of the subsequent hike (September is our base case) should remain unclear.”

Deutsche: Eyes “any discussions around the data thresholds officials have for raising rates in the near term. Recall that in the press conference Powell highlighted that at the July meeting officials will consider the entirety of the data since they last raised rates in May, not just the data since the June meeting. That seemed to lower the bar for a hike in July, and subsequent comments from the Chair have reinforced that message."

• “How are officials thinking about the appropriate pace of hikes at this point in the cycle?”
• "look for further clues about the extent of these upgrades from the officials’ discussions as well as the description of the staff’s forecast. Whether the staff continues to have a baseline for a recession later this year will be of particular note.”

Scotiabank: “Key [in the minutes] may be the possibility that hiking in July could be signalled using some variant of 'soon' language that has been employed in the past. Markets are mostly priced for a 25bps hike on July 26th. Also key may be appetite for compressing the two hikes shown in the dot plot into back-to-back decisions given Chair Powell's recent remarks versus the uncertainty that accompanies being data dependent.”

TD: “ We expect the minutes to expand on the reasoning behind this policy shift [to pause alongside higher rate projections], with the bulk of the Committee still leaning hawkish amid rising uncertainties about the outlook.“