FOMC minutes: No fireworks – Danske Bank

Analysts at Danske Bank explain that there was no major news in the FOMC minutes released last night and were on expected lines.

Key Quotes

“There are a few things worth highlighting: (1) The Fed says trade policy poses a downside risk to the US economy, (2) the Fed thinks the expansionary policy will boost growth over the next years but thinks it is difficult to estimate the magnitude, as the output gap is already nearly closed, (3) 'several' Fed members think it is likely necessary to increase the Fed funds rate above the natural/neutral rate over the next couple of years to avoid overheating the economy and (4) the Fed will continue to shrink its balance sheet despite the USD liquidity situation.”

“We still expect two more hikes this year with risk skewed towards three more hikes. The next hike will most likely come at the June meeting.”