Fed Minutes Signal Inclination for Less Hawkish Stance, US Dollar Retains Gains

Key points for feeding minutes:

• The Fed’s meeting minutes show a penchant for a less aggressive approach, but there is no broad consensus
• The document may be outdated as several central bank members have provided updated comments on their outlook in recent days
• the U.S. dollar He keeps winnings after Federal Open Market Committee The record releases the summary of its latest meeting, with traders focusing more on the US debt ceiling drama

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Today, the Fed released the minutes of its May 2-3 meeting, in which the central bank voted to raise borrowing costs by 25 basis points to 5.00%-5.25% and indicated a possible pause in the walking cycle of lag and backlog assessment. The impact of policy constancy on the economy.

According to the summary record of actions, several Fed officials noted that inflation remains unacceptably high and biased to the upside, while acknowledging that downside risks to growth have increased on the back of tightening credit conditions. In this context, the Fed staff maintained their expectation of a mild recession later this year.

On the outlook for monetary policy, there was no conclusive agreement on a specific course of action, with some respondents supporting further increases while others favored a more cautious, data-driven approach to retaining discretionary. In any event, the broader inclination was for a less aggressive stance, in keeping with the guidance given in the statement.

Although the minutes provided insight into the reasons behind May’s decision, the document may be outdated, as several policymakers have provided their updated opinions in recent days. For example, Bullard and Waller expressed support for further tightening to counter viscous price pressures, while others called for hitting the pause button to wait and watch.

Immediately after the release of the minutes, US Treasury yields pared their daily advance, but then recovered, allowing the US dollar to hold most of its gains for the session, with traders still very focused on the saga of the US debt ceiling. This will be the most important market catalyst to watch in the coming days.

Treasury revenue chart in US dollars

Source: TradingView