Thursday, 26 March 2015 11:53

Expectation in FOMC Meeting Minutes

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Last FOMC Meeting Minutes was released (on) 20th Nov. Minutes of FOMC Meeting held on 17-18Dec will be released late by today evening. Lets read the important point discussed in the last FOMC meeting Minutes.

  • Unemployment rate on Oct was 7.2%, prior 7.3% in Sept, which was within projection range of 7.1%-7.3%.
  • Unemployment was expected to decline as expansion in economic activity was expected, which is slow for projected period.
  • However, the committee will keep Federal fund target between 0-0.25percent, till unemployment rate is above 6.5% and Inflation below 2%.
  • CPI declined to 0.7% on Oct, prior was 1.1% Sept, which was below the target level.
  • Inflation rate of 2% is targeted by FOMC.
  • As per FOMC Member, Inflation rate is below its expected level. However, they believe that in long term Inflation rate will come back at expected level.

December 18th Statement review:

  • Committee decided to reduce Asset purchase program by $10billion in the beginning of January by reducing pace of mortgage backed securities to $35 billion per month from $40 billion and Longer Term Treasury to $40 billion per month from $45 billion.

What to look for in FOMC Meeting Minutes:

  • What is going to be pace of tapering? : If it is going to be higher than expected than it will support USD in long run.
  • Any change in long term inflation expectation?: Looking at inflation number, which is lower, we feel that it will remain low in short to medium term and long term expectations will remain anchored.
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