The FOMC minutes show that the Fed sees a slowing of inflation, which may support a peak in the federal funds rate this year.
However, the minutes were penned before notable data. January's jobs report was strong, showing an increase of 517,000 in nonfarm payrolls. Inflation was also higher than consensus, with the headline CPI printing at 0.5% m/m.
Fed Funds Futures have altered shape since the data releases. Its terminal rate has been pushed back from June and now occupies August and September (red columns). The futures have also flattened for the second half, suggesting that the higher for longer mantra is pricing in.
Fed officials sound more hawkish since the Feb meeting. Fed Chair Powell has reiterated it will take time for monetary policy to take effect and Fed President's Mester and Bullard (non-voting members) have suggested a potential 50bps for next month.
Friday sees the next piece of the puzzle when core PCE, the Fed's preferred measure of inflation, will be released.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.