The minutes of the 15-16 December FOMC meeting, where the Fed delivered its first hike since June 2006, were more dovish than the statement and Janet Yellen's tone at the press conference. The minutes reveal that, although the hike was unanimous, it was a 'close call' for 'some' FOMC members. In other words, not all FOMC members are as confident as Yellen sounded at the press conference. In particular, the subdued core inflation seems to be a major concern for the most dovish members. The main reason why they supported the tightening anyway was the strong development in the labour market as monetary policy works with a lag.
The minutes support our view that the majority of the voting members would like to take a cautious stance in the normalisation of monetary policy and monitor incoming data before moving on with the next hikes to begin with. We continue to expect three hikes this year and four hikes next year, i.e. a total of seven hikes until year-end 2017.
The minutes support Yellen's statement at the press conference that it would be enough for the Fed to see the oil price stabilising at current levels.
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