Currency Analyst since 2010

The importance of the FOMC minutes

    By Mark Jensen

The highlight of the week for USD is the release of the FOMC September meeting minutes on Wednesday (18:00 GMT). Traders will watch the release for the hint about when and at what pace the Fed will be raising interest rates.

It’s not an easy question for the Fed to set the timing for the rate increases. On the one hand, US unemployment rate declined to the 6-year minimum and hiring picked up. On the other hand, the participation rate, which measures the number of Americans employed or looking for a job as a share of the working-age population, decreased to 62.7%, the lowest since February 1978. In addition, US manufacturing growth slowed in September and wage growth stagnated.

It’s now very important to find out how the Fed itself interprets the latest economic data. According to strategists at IFR Markets, “the key significance in this week’s FOMC minutes will be in the extent to which the policy discussion reveals growing confidence in the economy’s ability to withstand a policy shift away from the Fed’s current deflation-fighting extraordinarily accommodative stance.”

The next FOMC meeting will take place on Oct. 29. According to Jon Hilsenrath, an expert on the Fed, officials will need to make a tough decision at their policy meeting later this month about whether to alter their guidance about the interest rate outlook, or wait until they update their economic forecasts in Dec. before changing the guidance.

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