FOMC Minutes Less Hawkish Than Yellen Comments

The Federal Reserve has released its minutes of the FOMC’s March 18 to 19 meeting. These comments should, in theory, not really move the market when you consider that the data is now out of date and consider that the Fed makes comments ahead of each meetings minutes. That being said, the markets do tend to move when these minutes get released.

A first observation that would be made is that the minutes show that there was an unplanned emergency call on March 4 among the members to discuss how the Fed should communicate guidance going forward. Most importantly, it seems that the “hawkish” timing of rate hikes signaled by Janet Yellen was wrongly interpreted in Yellen’s Q&A session after the last meeting.

As you would have guessed, weather was still cited as a reason for the drag in the prior month. The FOMC minutes said,

“The information reviewed for the March 18 to 19 meeting indicated that economic growth slowed early this year, likely only in part because of the temporary effects of the unusually cold and snowy winter weather. Total payroll employment expanded further, while the unemployment rate held steady, on balance, and was still elevated. Consumer price inflation continued to run below the Committee’s longer-run objective, but measures of longer-run inflation expectations remained stable.”

Some other observations are comments that the Fed seemed to be more accommodative in its minutes than Janet Yellen’s question and answer session may have led the markets to believe. A few officials also thought that the rise in mortgage interest rates reduced home sales more than expected. The Fed was also worried about misleading the public over their policies.


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