Eight times a year, the US central bank holds a meeting of monetary policymakers, also known as the FOMC. The minutes of the meeting resulted in the minutes of meeting, which is a detailed recording of the most thrilling event in the world.
Usually, these minutes are released two weeks after the meeting. Traders, economists, speculators to policymakers will closely scrutinize the course of the FOMC meeting for insights.
No kidding, every time the minutes of the meeting are released, the market can be shaken. So, what are the details regarding the minutes of this one meeting?
The Fed and the FOMC
The Federal Reserve System or The Fed is the central bank of the United States. As an institution that prints US dollars, of course, its influence is very large on the world economy.
Eight times a year, the Fed will hold regular meetings to determine the fate of its open markets through monetary policy. If needed, the intensity of the meeting can also be increased to every month or more. The meeting was called the Federal Open Market Committee or FOMC.
The FOMC is attended by 12 members, namely 7 of the Fed’s board of governors, the President of the Federal Reserve Bank of New York, and 4 of the 7 other Presidents of the Federal Reserve Bank alternately. Traditionally, this meeting is chaired by the chairman of the Fed, currently Jerome Powell. While his deputy is the President of the Federal Reserve Bank of New York, currently held by John C. Williams.
Discussion in FOMC
The discussion on the direction of short-term policy in the United States monetary world is at the core of the FOMC. In addition, the buying and selling of bonds, as well as the United States’ economic growth strategy, are discussed there.
Members exchange their opinions during the FOMC meeting. Matters regarding the development of the world economy, the labor market, the direction of monetary policy that is favorable for each region are discussed. The latest economic indicators are also used as benchmarks.
At the end of the meeting, members have the opportunity to use their voting rights to determine the direction of monetary policy for the next period.
Minutes of Meeting Are Details of FOMC
Because of its central role, this meeting became the subject of speculation on Wall Street’s capital markets. All eyes listened to what and how each thing was conveyed in the forum.
In fact, the results of the FOMC meeting are very important. Policies such as quantitative easing, tapering off to plans to increase the Fed’s benchmark interest rate or Fed Funds Rate (FFR) are decided here.
Besides the fundamentals announced by the FOMC, details are also in the spotlight. Therefore, two weeks after the FOMC was held, the minutes of the meeting were released.
FOMC members are often divided into two categorizations, namely the hawkish and the dovish.
Hawkish are those who are more pro on the direction of tight monetary policy. While the dovish pros on market stimulation, moderation, and things in between. The current Fed Chair Jerome Powell is well known as a dovish, a contrast to his hawkish predecessor Janet Yellen.
Both, namely the hawkish and dovish are ‘exciting spectacle’ every time the FOMC is held. Because of the excitement, seconds and minutes are very valuable to watch, replay, analyze in-depth, and use as reasons to shake up the market.
Latest Minutes of Meeting
So, what are the contents of the latest minutes of the Fed’s meeting?
The current issue in the monetary world is the labor market which is difficult to leverage due to the COVID-19 pandemic. However, in the United States, the situation has recovered quite a bit thanks to their monetary policy package last year.
Therefore, the tapering-off signal after the easing of monetary policy is blowing hard. The driver is employment absorption that is better than economists predict, although there are still more than 4 million workers in the US who have not been absorbed due to the pandemic.
Therefore, for the time being, the tapering-off has not been implemented. However, this made the FOMC members confused because this policy was adopted in the midst of skyrocketing inflation. Compared to last year, inflation in May there grew 5%, even though they are still implementing a policy of close to zero interest rates.
The most reasonable reaction to high inflation is to implement a tight monetary policy. However, tighter policies will disrupt the performance of the labor market in alleviating unemployment.
It is this conflict that has recently made the FOMC more popular. Even so, the minute of the meeting is an indication of the course of the discussion and the attitude of its members that the era of tight monetary policy is just waiting for momentum.