FX.co ★ Fed minutes: Complete disagreement among the members

The minutes of the last Fed meeting were published last night. No important decisions were made during the meeting itself. Nevertheless, the markets continue to actively discuss and expect when the Fed will announce its readiness to start curtailing the quantitative stimulus program. The markets are waiting for this step as soon as possible. Experts believe that at the September meeting, the regulator may already announce the gradual end of QE. The least optimists believe that this step will be announced at the November or December meeting. Thus, almost all the attention of the markets is now directed at the Fed and personally Jerome Powell. It is important to note that the Fed's protocols almost never cause any reaction from the markets. Simply put, they usually do not contain any important information that the markets were not ready for. Last night, the US currency fell by about 40-50 points against its main competitors in just 10 minutes. After that, it resumed its main movement – its growth. Thus, we can immediately conclude that the Fed's protocol has not changed anything drastically: the US currency continues to grow and we can even say it has strengthened this movement, since the downward movement in the euro/dollar and pound/dollar pairs continued tonight. Therefore, despite the fact that the US currency initially fell, it eventually rose. Consequently, the protocol was contradictory, but supported the US currency nonetheless.

In principle, as usual, there was nothing new in the protocol. The minutes showed that an increasing number of members of the monetary committee support the curtailment of the QE program this year. A week earlier, several members of the Fed (Eric Rosengren, Raphael Bostic, Esther George, and others) spoke in favor of being ready to vote for curtailing QE in September. Therefore, the information from the protocol about the growing number of votes for curtailing incentives is not new information. The protocol made it clear that some members of the Fed are ready to wind down the QE program as quickly as possible. Some Fed members are ready to wait a few more months, for example, the beginning of 2022, so as not to harm the economy. A certain number of Fed members are afraid of the transformation of temporary inflation into permanent. Several Fed members pay great attention to the delta variant of COVID and fear that it will affect the economy negatively. All members of the Fed recognize that it is necessary to choose the right option of "tapering", to take into account all the factors that affect or may affect the economy in the near future. US stock indexes responded to this protocol, all as one, with a decline. As we said earlier, the more chances of QE curtailing in the near future, the worse it is for the US stock market, which has been living on injections from the Fed for the past year.