The Federal Open Market Committee (FOMC) released minutes from its December meeting, and the document showed that most participants are willing to offer additional interest rate cuts if inflation declines over time. The document showed that economic growth is expected to move modestly faster than at the October meeting.
Key quotes
- Most respondents felt that further interest rate cuts would likely be appropriate if inflation declines over time as expected.
- Some of those who supported lowering interest rates noted that the decision was well balanced, or would have supported leaving interest rates unchanged.
- Most participants supported lowering the federal funds rate, although some preferred leaving interest rates unchanged.
- Some participants noted that given their economic outlook, it would likely be appropriate to leave interest rates unchanged for some time after they were cut in December.
- Participants felt that reserve balances had declined to significant levels, and deemed it appropriate to begin reserve management purchases of Treasury securities.
- Many participants cited the risk of higher inflation becoming entrenched, suggesting that further interest rate cuts could be misinterpreted as non-compliance with the 2% target.
- Most participants indicated that moving toward a more neutral political stance would help prevent a potential deterioration in the labor market.
- Policymakers stressed the importance of clarifying that Treasury purchases are intended only to ensure price control and have no implications for monetary policy.
Market reaction to the minutes of the Federal Open Market Committee meeting
The US Dollar (USD) gained some bullish momentum with the headlines. The US Dollar Index (DXY) is currently at the 98.20 area, but is still close to a multi-month low of 97.91.
US dollar price today
The table below shows the percentage change in the US Dollar (USD) against the major currencies listed today. The US dollar was the strongest against the British pound.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | 0.18% | 0.30% | 0.25% | -0.01% | -0.07% | 0.15% | 0.24% | |
| euro | -0.18% | 0.12% | 0.06% | -0.20% | -0.26% | -0.03% | 0.06% | |
| GBP | -0.30% | -0.12% | -0.04% | -0.31% | -0.37% | -0.15% | -0.08% | |
| JPY | -0.25% | -0.06% | 0.04% | -0.27% | -0.31% | -0.10% | 0.03% | |
| Canadian | 0.01% | 0.20% | 0.31% | 0.27% | -0.04% | 0.20% | 0.25% | |
| Australian dollar | 0.07% | 0.26% | 0.37% | 0.31% | 0.04% | 0.22% | 0.30% | |
| New Zealand dollar | -0.15% | 0.03% | 0.15% | 0.10% | -0.20% | -0.22% | 0.07% | |
| Swiss franc | -0.24% | -0.06% | 0.08% | -0.03% | -0.25% | -0.30% | -0.07% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select USD from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
