- The Fed insists June will be a live-meeting
- Data-dependency forbids pre-commitment
- Maximum employment is debated
In April, the FOMC left interest rates unchanged, without signalling anything substantial as for what would come next. The minutes of that meeting, released this week, provided way more information about the sentiment of policymakers. The next meeting – i.e. on June 14th and 15th – is mentioned eight times within the minutes. Eight weeks before, the minutes comprehended only one reference to the following meeting, with none in neither January nor December. In October, though, the meeting before they decided on a rate increase, December was mentioned three times… Admittedly, when talking about the June meeting, participants were willing to leave it open, without pre-committing. But so did they in October…
The message is that June is an open meeting: with data-dependency several times reaffirmed, most FOMC members will probably not make up their mind before time has come. Still, while some Fed officials recently insisted on the “June possibility”, there was another “hawkish” hit within the minutes: maximum employment. Although it was already discussed in March, the fact that current labour market conditions could be consistent with maximum employment was a more broadly shared point of view in April, the number of the believers coming up from “some participants” to “many participants”…
by Alexandra ESTIOT