US Federal Reserve Will Release October’s Meeting Minutes

US Federal Reserve will soon release the minutes for October‘s monetary policy meeting, which had directly led to the Fed’s third rate cut in the year- an action much in line with the market‘s general expectations. On the other hand, the Fed has removed “taking appropriate action to maintain economic expansion” from the interest rate statement. The expression has been in the interest rate statement since June, paving the way for the Fed’s rate cuts. Given that the US economy has rallied more than the market had expected, this change of wording suggests that the threshold for a further rate cut is very high.

On November 13th (EST), the US Federal Reserve Chair Powell once again emphasized his optimism about the US economy. He said, “sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2% objective as most likely.” At the same time, Powell also admitted that uncertainties in the trade sector continue to plague US corporate confidence and business investment, while foreign economic slowdown can also hinder US growth. Policymakers will closely observe all types of economic data to see whether they remain in line with market expectation.

In addition, the Fed is not worried about inflation. Although Powell still believes that the inflation rate is close to the 2% target set by the Fed, it is clear that the historical model of the relationship between price and the weak job market no longer prevail. The Fed used to consider a 5% unemployment rate was almost full employment, but now economists must admit that the US economy can operate at a much lower unemployment rate.

Besides the Federal decision of interest rate cut announced at the end of October, several key indicators are being released in the US recently: The core CPI rose 0.2%, in line with expectations; PPI rose 0.4%, higher than the expected 0.3%... a series of breakthroughs in important economic data indicate the US economy is rallying, and Fed officials are generally optimistic about the countrys economic situation. Survey data showed that the market estimates a 96% probability for the Fed to hold interest rate unchanged, the remaining 4% implied odds are for 25 basis points.

With the release of the Fed‘s meeting minutes at the corner, what’s your view about the monetary policy in the future？ Stay tuned as WikiFX presents you more forex dynamics and market trend analysis that add to your investment success.