Monetary Policy for Dummies

by Jeffrey P. Snider
Alhambra Partners

After seeming so “dovish” last month in the bland, edited April policy statement, the FOMC meeting minutes reveal supposedly a different vibe. Today’s release has to this point given “markets” more to assume that a second hike will be coming in June. The statement itself leaves little doubt about what is actually dictating their (irrelevant) policy gestures.

Many participants noted that downside risks emanating from developments abroad, while reduced, still warranted close monitoring. For these reasons, participants generally saw maintaining the target range for the federal funds rate at ¼ to ½ percent at this meeting and continuing to assess developments carefully as consistent with setting policy in a data-dependent manner and as leaving open the possibility of an increase in the federal funds rate at the June FOMC meeting.

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