The Federal Open Market Committee (FOMC) meeting held on December 10 – 11. The minutes of the meeting is an important factor in guiding the global markets and will be published tonight at 00:00 (GMT +1). To briefly recall the bank’s statements at the last monetary policy meeting, which lasted two days, that the benchmark interest rate remained unchanged in line with market expectations. Also, the FED kept the federal funding rate steady within the range of 1.50 – 1.75 percent, and the implementation note stated that the interest rates are sufficient to support growth and that the labor market is strong. Implementation note also stated that the FED maintained its growth projections for the US economy at 2.2 percent for 2019, at 2 percent for 2020 and at 1.9 percent for 2021. The Bank also removed the word “uncertainties” from the implementation note.
In a press conference following the decision, FED Chairman Jerome Powell said the economy was growing modestly and that he expected that moderate growth to continue. Powell stressed that inflation pressures remain weak and that time is needed to push inflation expectations upwards and that a significant and lasting rise in inflation is needed to boost interest rates. The most important explanation of Powell was that monetary policy will remain suitable as long as the incoming data is in line with the outlook.
Based on the Bank’s steady federal funding rate at the last FOMC meeting of the year and statements made by Chairman Jerome Powell, markets will look for clues in the minutes, such as the Committee members may change their approach to monetary policy stance and the Bank may change or maintain its stance to maintain the growth, inflation and employment targets for 2020. The most important signs that markets will be looking for will be how far the Fed can maintain its current monetary policy stance, especially in the context of maintaining its 2 percent inflation target and reemergence of the disinflation risks.