Fed Minutes

The minutes of the August Federal Reserve meeting were released and show that the Fed is referencing a rate hike sometime in the future.  The Fed references slow growth and “less than potential” GDP expectations though the middle of 2009. They also noted that inflation was expected to moderate, but not until next year. 

The important part of these details is the lack of any indecision on what the next step is.  Rumors have been flying that the Fed is going to cut rates even more than they did earlier this year.  These meeting minutes indicate that while the timing is a big question, the Fed knows that their next move is a hike. Interest rates will not be going any lower. 

The lone dissenter from the Fed rate decision this month was Richard Fisher who voted for an immediate rate hike.  Mr. Fisher is worried about inflation and inflation expectations and supports more aggressive action to get inflation contained sooner rather than later.

The US dollar showed slight weakness after the Fed minutes, but remains in recent ranges with the likley hood of breaking out and continuing it’s rebound during the past two months.