May FOMC Minutes Preview: June Pause Potential In Focus (1/2)

The minutes to the May FOMC meeting arrive Wednesday at 1400ET/1900UK. As usual there is a staleness factor to the release, given that we've heard from Powell and most of the FOMC since the meeting and have up to date views on monetary policy from most of them (see our latest FedSpeak update).

• Our May meeting review is here.
• An initial area of focus will be on how widely the May 25bp hike was supported - apart from the fact that it passed by unanimous vote, Powell suggested in the press conference that there may have been some hesitation: "support for the 25 basis point rate increase was very strong across the board. I would say there are a number of people—and, you know, you’ll see this in the minutes. I don’t want to try to do the head count in real time....but people did talk about pausing, but not so much at this meeting".
• The latter raises the key question of how many participants expected- at that time - a rate pause at the June meeting. Powell: "a decision on a pause was not made today...we will be driven by incoming data meeting by meeting and we will approach that question at the June meeting."
• Along with discussion of the degree to which FOMC participants saw policy as now being "sufficiently restrictive" (the statement change, and Powell's comments, suggest much of the Committee sees themselves as already there), any indication of the degree to which banking sector stress is equivalent to rate hikes would be interesting.
• Additionally, any color on recession risks (Powell was asked about this in the press conference) and the scenario of inflation persisting even through a labor market downturn would be of note.
• The potential economic impact of the debt ceiling crisis could be discussed, though while Powell said it “came up” in the meeting, “I wouldn’t say it was a factor in today’s decision”.