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Minutes Preview: Attention On Liftoff Timing And Balance Sheet


The minutes of the Dec 14-15 FOMC meeting are released today at 1400ET/1900GMT. Attention will be on the following:

  • Any further elaboration on the FOMC's reasoning behind accelerating the taper and signaling faster rate hikes in the dot plot at December's meeting, in particular regarding the evolving assessment of maximum employment and upside inflation risks.
  • Discussion of how soon the FOMC might hike rates after taper is over (i.e., is the March meeting immediately following the expected conclusion of the taper 'live' for rate liftoff?). Powell said at the December press conference that compared to the last cycle, "I don't foresee that there would be that kind of very extended wait at this time" given relative economic strength.
  • Any more detail about balance sheet normalization / reinvestment / runoff strategy. Powell said post-meeting "we did talk today about the balance sheet" including "the sequence of events regarding the runoff and that sort of thing with the balance sheet last time" though they did not make any decisions, with attention due to be paid "in coming meetings".
  • To what degree the FOMC saw Omicron as a serious risk to the outlook - "new variants" were included as "risks" in the December statement.

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