It’s a big week for Fed watchers — Wednesday afternoon, the central bank will release the minutes from its March meeting, when it decided to raise interest rates a quarter of a percentage point.
As usual, people will analyze every word looking for clues on future rate hikes. These latest minutes could be especially interesting.
Think about what had just happened right before the Fed’s last meeting on interest rates. Regulators had closed Silicon Valley Bank after a run, and the Swiss government had hastily arranged the sale of Credit Suisse to reassure skittish investors.
“This meeting took place in the middle of a crisis,” said Ethan Harris, head of global economic research at Bank of America. “And so the Fed, themselves is probably quite confused about what kind of situation they’re facing.”
The minutes of last month’s meeting will give us a glimpse at how Fed officials respond to an ongoing crisis. Glimpse — because Fed minutes aren’t transcripts of the meetings. They’re more like CliffsNotes.
Minutes also don’t tell readers who said what because it’s all anonymous. That leaves Tiffany Wilding, an economist at investment managers PIMCO scrounging around for clues.
“Usually we get words like “a number of people, some officials said this, a few members pointed out that,” Wilding said.
She wants to know if Fed officials think the banking crisis will do some of their work for them as bankers make it harder to get loans. If businesses and consumers can’t borrow and spend, that would tamp down inflation — just like a rate hike.
Now, Wilding said she will be looking to see information on things like “how many people thought that a couple of more rate hikes were appropriate versus no rate hikes.”
Other economists, like Lauren Goodwin at New York Life Investments, are less interested in who agrees on where interest rates should go. She’s looking for signs of disagreement over interest rate policy.
“Fed meeting minutes tend to be an early indicator of where debates are emerging that might suggest the path of policy ahead is a bit less certain,” Goodwin said.
She said that could mean fewer rate hikes or even a pause at the Fed’s meeting next month.
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