F_E_D Minutes

I don't think we learned a lot from the F_E_D minutes, thus there hasn't been a significant knee jerk reaction.

What we did learn, was using the secret decoder ring the minutes came with, the term "Patient" meant "flexible", not necessarily the definition one might usually take away that would suggest a longer period of time as in one being patient until their opportunity. In the F_E_D's mind, patient means flexible which means rate hikes could come either sooner or later , all depending on data, I don't think it was the best, most articulate choice of words.

We also learned that the F_E_D is comfortable raising rates at the current inflation rate of 1.4%, .6% below the F_E_D's 2% comfort zone, the only caveat being that if they were to raise at current levels , they'd need to feel assured that inflation would be heading toward their 2% long term goal, which essentially means is that the F_E_D could hike at any moment, the 1.4% inflation currently is not a hindrance to them doing so and the caveat of feeling comfortable that inflation will head towards 2% is about as arbitrary as their assessment that lower oil prices is a net plus and transitory as well as global risks being about equal with US upside, balancing any fears there.

All in all it sounds like they gave themselves the elbow room and clearance to raise rates whenever they want, taking away any arguments that some might make that inflation is too low or that Energy prices will keep inflation too low as they view it as a new positive and transitory, and finally the global downside risks are balanced with the US upside, thus global risks to the downside aren't anything standing in their way from earlier than later rate hikes.

There's a lot more I could say on the issue, but it's opinion and conjecture, but let me just sum it up as , I don't think policy normalization is something the F_E_D is wanting to do because the US economy is "CLEARLY" ready for it, I think it's something the F_E_D HAS to do, because they've painted themselves in to a corner with little dry powder to respond to any future shocks and need to regain some of that dry powder through policy normalization, the BIS said it in their last two major reports and I think the F_E_D is not ignoring the BIS's comments that "Leading central banks don't have the ability to respond to even a garden variety recession" because of their balance sheets spread so thin.