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Fed's Latest Minutes Show 'Tricky' Position Committee Is In

Fed's Latest Minutes Show 'Tricky' Position Committee Is In

The Federal Open Market Committee's latest minutes showed members generally agreed the prudent move was to wait for added data on labor market conditions and the impact of the Brexit before making any rate changes. Most Fed members suggested a Brexit vote could generate turbulence in financials markets.

U.S. and European markets collectively lost about $160 billion in market cap in the few trading sessions following the June 24 Brexit vote.

Members favored monetary policies that should remain accommodating for "some time." Several Fed members highlighted downside risks to economic outlook and concern with possible "sharp" slowdown in job growth

'Time Of Fiscal Stimulative Policy Will Soon Be Upon Us'

"The minutes highlight the tricky position Fed officials find themselves in," Allianz Chief Economist Mohamed A. El-Erian told Benzinga, "including trying to get their arms around the unusual uncertainty facing the economy on account of both domestic and international factors. They reinforce the notion of a careful, measured and data dependent policy approach."

Related Link: U.S. Dollar Index Little Changed After FOMC Minutes

RSM US LLP Chief Economist Joe Brusuelas told Benzinga, "The Fed is clearly concerned that the neutral rate is much lower than it has been willing to publicly acknowledge implying that the trend growth rate is likely closer to 1.5 percent than the current 2 percent. This creates a much higher hurdle for the Fed as they attempt to shape investor expectations about the pace of growth and the policy path."

He continued, "At this point I do not anticipate any move on the federal funds rate till mid-2017 at the earliest. In my estimation the probability of a rate hike is approximately equal to a cut. The Fed like, most central banks, either have or will shortly reach the limits of policy efficacy. The time of fiscal simulative policy will soon be upon us."

Markets showed a muted response to the 2 p.m. ET release. The SPDR S&P 500 ETF Trust (NYSE: SPY) recently traded at $209.46.


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