bank, money, finance-2907728.jpg
  • Highlights of the minutes of the March 15-16, 2022 FOMC meeting

‘Many’ Participants Noted They Would Have Preferred A 50 Bps Hike – Minutes

The Federal Reserve hiked rates by 25 basis points on March 16. The minutes will offer clues on how hotly they debated hiking by 50 basis points along with commentary on the balance sheet rundown.

  • ‘Many’ participants noted they would have preferred a 50 bps hike
  • Participants judged appropriate to move to neutral ‘expeditiously’
  • Participants noted that — depending on developments — a move to tighter policy stance could be warranted
  • Participants generally agreed to monthly caps of about $60B for Treasury securities and $35B for MBS
  • Participants generally agreed that caps could be phased in over a period of three months or modestly longer
  • All participants underscored the need to remain attentive to the risks of further inflation
  • Participants generally agreed that after balance sheet runoff well underway, would be appropriate to consider sales of MBS
  • Many noted that one or more 509 bps increases in the target range could be appropriate at future meetings, particularly if inflation pressure s remained
  • Participants agreed Fed was ell placed to begin balance sheet reduction as early as the May FOMC meeting
  • Several participants judged that the upside risks to inflation from the war were more pronounced than downside growth risks

The knee-jerk was lower in the dollar but there’s plenty of here for the dollar bulls. The balance sheet talk was generally in-line with what markets were thinking but the ‘many’ comment on 50 bps emphasizes the hawkish pressure the Fed is feeling.