Suitably Flip

Measuring "Measured"

The minutes from the May 3 Federal Reserve FOMC meeting are out.  The thrust:

While pressures on inflation had picked up in recent months and pricing power was more evident, longer-term inflation expectations remained well contained. In these circumstances, the Committee believed that policy accommodation could be removed at a pace that would likely be measured but noted that it would respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

In the minutes from the two prior meetings (February 2 and March 22), the language was slightly, but tellingly, different:

As a consequence, the Committee again judged that policy accommodation could be removed at a pace that was likely to be measured, although the path of policy would depend importantly on evolving economic prospects.

While bulls were looking for language suggesting a forthcoming pause in rate increases, the new phrasing suggests to me that the Fed is prepared to considering hiking more aggressively, if they see lingering inflation signals.

The market is trading sideways in the half hour following the release, but this looks like fairly bear-friendly verbiage.

Comments

Measuring "Measured"

The minutes from the May 3 Federal Reserve FOMC meeting are out.  The thrust:

While pressures on inflation had picked up in recent months and pricing power was more evident, longer-term inflation expectations remained well contained. In these circumstances, the Committee believed that policy accommodation could be removed at a pace that would likely be measured but noted that it would respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

In the minutes from the two prior meetings (February 2 and March 22), the language was slightly, but tellingly, different:

As a consequence, the Committee again judged that policy accommodation could be removed at a pace that was likely to be measured, although the path of policy would depend importantly on evolving economic prospects.

While bulls were looking for language suggesting a forthcoming pause in rate increases, the new phrasing suggests to me that the Fed is prepared to considering hiking more aggressively, if they see lingering inflation signals.

The market is trading sideways in the half hour following the release, but this looks like fairly bear-friendly verbiage.