FOMC October minutes – No surprise; No reaction

Today’s FOMC minutes indicate a rate increase is clearly on the cards in December; the minutes state that most FOMC participants now believe the conditions for a rate increase “could well be” met by then. The signal could hardly be clearer.

These minutes were also effectively pre-announced, given the similarities to last week’s speeches from Fed policymakers which we analyzed in detail in an earlier post. The Fed’s tendency to rely on (higher) financial markets prices as its primary measure of (declining) underlying economic risks is a little disconcerting but also not new news.

Our view remains that absent a market hiccup the Fed lift-off date will be December 2015 and is highly likely to be accompanied by soothing talk of a very gradual pace of tightening.