FOMC Minutes: Participants saw gradual move to more-neutral stance if data as expected

• Participants indicated if data came in about as expected, it would be appropriate to continue to move gradually toward a more-neutral stance
• Participants indicated Fed was at or near point at which it would be appropriate to slow pace of easing
• Most see risks to employment and inflation goals as “roughly balanced”
• “Almost all” participants see increased upside risks to inflation outlook
• Foreign central banks generally easing policy faster than Fed heading into 2025
• GDP continues “solid” expansion though slower than previous quarters
• Credit conditions still restrictive despite easing in borrowing costs
• ‘Some’ participants favored holding rates steady given inflation persistence risks
• Strong consumer spending supported by labor market, rising real wages
• Housing services inflation moderating but “somewhat elevated”
• Business contacts report increased price sensitivity from consumers
• Broad equity prices rise on corporate profit optimism post-election

This is an important detail:

“All participants judged that uncertainty about the scope, timing, and economic effects of potential changes in policies affecting foreign trade and immigration was elevated. Reflecting that uncertainty, participants took varied approaches in accounting for these effects. A number of participants indicated that they incorporated placeholder assumptions to one degree or another into their projections. Other participants indicated that they did not incorporate such assumptions, and a few participants did not indicate whether they incorporated such assumptions.”

This is also notable when it comes to staff forecasts:

“After incorporating the recent data and preliminary placeholder assumptions about potential policy changes, real GDP growth was projected to be slightly slower than in the previous baseline forecast, and the unemployment rate was expected to be a bit higher but to remain near the staff’s estimate of its natural rate.”

The market is largely unmoved on the data.

This article was written by Adam Button at www.forexlive.com.