Recap of the March meeting
The last FOMC (Federal Open Market Committee) meeting was on March 20–21, 2018. At the meeting, the target range for the federal funds rate increased 0.25% to 1.50%–1.75%. The decision to increase the rate was made after Fed members assessed current economic conditions and the outlook for economic activity. The decision to increase the interest rates was unanimous.
The FOMC meeting minutes are usually released three weeks after the FOMC meeting. The meeting minutes help investors, market observers, and economists understand the reasons behind the Fed’s decision. The recent decline in US equity (SPY) markets started with the fear of rising rates and rebounded after wage growth stalled in February. The focus turned to trade wars and the Syrian crisis. As a result, the March FOMC meeting minutes didn’t impact markets on that day. In the long run, the developments at this meeting could play a major role in financial markets.
Key discussion points
The key points that were discussed at the March meeting indicated that the FOMC members were optimistic about the current outlook for US economic activity. The statement implied that the fed rate (BSV) curve could be steeper than previously expected. Members think that the recent tax cuts could boost the output over the next few years. Inflation (TIP) could reach the 2% target due to recent policy changes. Discussing the ongoing trade wars, most members think that uncertainties surrounding trade policies could pose downside risks for the economy. Overall, the FOMC minutes were “hawkish.”