The FOMC Meeting Minutes June 15-16 revealed Wednesday that the committee’s standard of “further substantial progress” was generally considered to have not yet been met, according to Reuters.
Market reaction
With the initial market reaction, the dollar weakened modestly against its rivals and the US dollar index, which hit a three-month high of 92.84, was last seen posting small daily gains at 92.58.
Featured statements summarized by Reuters
“Several participants mentioned that they expected the conditions to start slowing the pace of asset purchases to be met somewhat earlier than they had anticipated in previous meetings in light of the incoming data.”
“However, several other participants commented that it was preferable to reduce the pace of Treasury and MBS purchases proportionally because this approach would be well aligned with previous committee communications.”
“Some constituents saw the incoming data as a less clear signal about the underlying economic momentum.”
“Some participants mentioned that they expected the economic conditions set out in the committee’s future guidance for the federal funds rate to be met somewhat earlier than they had projected in March.”
“Some policy makers judged that the committee would have information in the coming months to make a better assessment of the trajectory of the labor market and inflation.”
“Several members emphasized, however, that the uncertainty surrounding the economic outlook was high and that it was too early to draw firm conclusions about the trajectories of the labor market and inflation.”
“Several of those participants emphasized that the committee must be patient in assessing progress toward its goals and announcing changes to its asset purchase plans.”
“For several participants, this greater uncertainty regarding the evolution of the economy also implied significant uncertainty about the appropriate path of the federal funds rate.”
“Several participants said it was preferable to reduce the pace of Treasury and MBS purchases proportionally because Treasury and MBS purchases provide accommodation through their influence on broader financial conditions.”
“Participants generally agreed that the economic recovery was incomplete and that risks to the economic outlook persisted.”
“Participants generally judged that, as a matter of prudent planning, it was important to be well positioned to reduce the pace of asset purchases, if appropriate, in response to unexpected economic developments.”
“Inflation had risen more than anticipated, the rise was seen to largely reflect temporary factors, and participants expected inflation to decline toward the committee’s long-term 2% target.”
“In the next meetings, the members agreed to continue evaluating the progress of the economy towards the goals of the committee and to begin to discuss their plans to adjust the trajectory and composition of the asset purchases.”
“Participants reiterated their intention to notify well in advance of an announcement to reduce the pace of purchases.”
“Participants considered that the uncertainty surrounding their economic projections was high.”
“A substantial majority of participants considered that the risks to their inflation projections were tilted upward because supply disruptions and labor shortages could persist longer and could have larger or more persistent effects.”
“FOMC members judged that the economic outlook had continued to improve and that the most negative effects of the pandemic on the economy were most likely.”
“While they generally viewed the risks to the economic activity outlook as broadly balanced, a substantial majority of participants viewed the risks to their inflation projections as skewing upward.”
“Several participants expressed concern that longer-term inflation expectations could rise to inappropriate levels if high inflation readings persist.”
“Several other members cautioned that downside risks to inflation persist because temporary pressures on prices could diminish faster than currently anticipated.”
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