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June Minutes: Concern Over Economy, But "Several" Eye Hike Potential

FED
Some key quotes from a mixed set of FOMC minutes (link here) - some come off as a little hawkish, but overall the minutes lean a little dovish vs the upward 2024 rate shift in the Dot Plot:
  • On possible hikes - maybe a little hawkish at the margin, as only a few participants have publicly discussed the possibility of hikes: “Several participants observed that, were inflation to persist at an elevated level or increase further, the target range for the federal funds rate might need to be raised." In May's minutes, "Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate."
  • And echoing Powell's call for patience in the press conference: “Participants affirmed that additional favorable data were required to give them greater confidence that inflation was moving sustainably back to 2%."
  • However on a more dovish note, the following seems a little broader in terms of cutting conditions than the previous minutes' mention of "unexpected weakening in labor market conditions": “A number of participants remarked that monetary policy should stand ready to respond to unexpected economic weakness.”
  • Indeed a key theme is that the FOMC seemed a little more concerned about growth/employment overall: “The vast majority of participants assessed that growth in economic activity appeared to be gradually cooling, and most participants remarked that they viewed the current policy stance as restrictive."
  • Similarly, “Participants observed that many labor market indicators pointed to a reduced degree of tightness in labor market conditions.” (And on the household vs establishment survey debate ahead of Friday's payrolls: "Several participants also suggested that the establishment survey may have overstated actual job gains.")
  • A subtle difference from last time - June's minutes: "Some participants noted that there was uncertainty about the degree of restrictiveness of current policy." Therefore, it seems a growing number feel that policy is restrictive - in May's minutes, "many participants commented on their uncertainty about the degree of restrictiveness".
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