FOMC minutes: Eyes on Fed’s plans for balance sheet normalization – Nomura

Analysts at Nomura present a detailed preview of the key points to watch out for in today’s release of the FOMC January meeting minutes scheduled at 1900 GMT.

Key Quotes:

“We expect more clarity regarding the FOMC's plans for balance sheet normalization from the minutes of the January FOMC meeting. The minutes from the two preceding meetings - November and December - included important sections on the balance sheet.

We believe the corresponding section of the January minutes will confirm the Committee's plans to end balance sheet normalization by end-2019.

The Committee has been clear that rates are on hold for the time being. A key issue is the set of circumstances that would drive the FOMC to raise rates.

In his post-meeting press conference Chair Powell suggested that clear evidence of upside pressure on inflation was a necessary condition for raising rates.

It will also be interesting to see if there was discussion of what would drive the Committee to lower interest rates.”