5 Things to Watch in the Fed Minutes

The Federal Reserve left short-term interest rates unchanged at last month’s meeting, citing trepidation about weak growth overseas. The minutes of the policy makers’ discussions, to be released Thursday at 2 p.m. EDT, could reveal more detail on officials’ views on several issues, including when to start lifting rates and how much to worry about global economic and market turbulence.

1) Rate Increase Timing
Some Fed officials, including Fed Chairwoman Janet Yellen, have said since the meeting they still expect to start raising their benchmark short-term interest rate this year. The minutes could shed light on how broadly and strongly that view was shared.

2) How Close a Call?
San Francisco Fed President John Williams has described the decision to hold interest rates steady in September as a “close call.” Some officials might not agree it was close at all, including Ms. Yellen, who won a 9-1 vote. Richmond Fed President Jeffery Lacker dissented at the meeting because he was ready to lift rates then. New economic projections released after the gathering show four of the 17 officials went into the meeting expecting they wouldn’t start lifting rates until next year or later. The minutes could shed light on how close the decision was, and on the arguments for and against a rate increase.

3) Foreign Affairs
The Fed’s postmeeting policy statement added a sentence about risks stemming from “global economic and financial developments” and said the central bank is “monitoring developments abroad.” The minutes could provide more detail on policy makers’ concerns about the economic slowdown in China and other emerging markets. Since Ms. Yellen also raised “concerns about the deftness” of Chinese policy makers in response to the slowdown, the minutes also could give more insight into officials’ views on Beijing’s handling of stock market and currency fluctuations.

4) Inflation
The Fed has said it will start raising rates after it has seen some more improvement in the labor market and is “reasonably confident” inflation will climb back to its 2% target over the medium term. Its preferred measure of inflation has run below target for 40 consecutive months. The minutes could shed light on how officials viewed the persistence of low U.S. inflation.

5) Labor Market Conditions
Analysts warn the minutes could look somewhat stale since the meeting took place before the disappointing September jobs report, which was released Friday. It showed hiring had slowed over the past three months to the slowest pace since February 2014. The minutes will show how officials’ viewed the labor market’s health before they saw those figures.

(via WSJ)