FOMC Minutes: Low inflation no deterrent to further tightening – HSBC

The minutes of the June FOMC meeting showed that most of the policymakers believe that, even after a 25bp rate hike, current policy remains “accommodative” and will support a return to 2% inflation, explains Kevin Logan, Chief US Economist at HSBC.

Key Quotes

“In addition, a recent easing in financial market conditions (such as elevated equity markets and tight credit spreads) reinforces the case for tightening policy further.  The Committee agreed that a move to start disinvesting some of the securities in the Fed’s portfolio would be appropriate “this year.” We expect that the FOMC will announce the start of disinvestment in September and that the Committee will deliver another 25bp rate hike in December.”