The holiday season is almost here, but don’t switch off just yet.
The Federal Reserve minutes Wednesday are likely to be the final piece of news piquing the interest of investors before the Thanksgiving holiday.
The minutes are usually closely watched and this time will be no different, with markets keen to digest the Fed discussions on the future path of interest rates.
It’s not like they’ve been starved in recent weeks. Comments by a number of Fed speakers have kept investors more than busy, not least those made by James Bullard. The St Louis Fed President said rates weren’t nearly high enough and that a policy rate of 7% may be needed to calm inflation–it currently sits at 3.75% to 4%.
In what could have been a direct response, San Francisco Fed President Mary Daly offered a reminder that the Fed’s quantitative tightening–the shrinking of its balance sheet–was also having an impact. She warned against the perils of overtightening if the central bank doesn’t factor in the lag between policy changes and impacts on the economy.
Those speeches, and several more, have been played out in public but with the minutes investors will learn where the direct discussions between officials are heading. Granted, they are discussions that happened several weeks ago, but they could also lift the lid on various scenarios, dependent on inflation and other data.
Since the Fed’s November meeting, data showed U.S. inflation cooled in October to its slowest pace since the start of the year, to the delight of stock markets. The minutes could change how markets interpret and react to upcoming data.