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FOMC Minutes: ‘Many’ participants noted they would have preferred a 50 basis point hike – Minutes


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  • Highlights from the March 15-16, 2022 FOMC Meeting Minutes

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Wednesday 06/04/2022 | 17:59 GMT-0

06/04/2022 | 17:59 GMT-0

FOMC Minutes: ‘Many’ participants noted they would have preferred a 50 basis point hike – Minutes

The Federal Reserve raised rates by 25 basis points on March 16. The minutes will offer clues to the ardor with which they debated a 50 basis point hike as well as comments on the state of the balance sheet.

  • “Many” participants said they would have preferred a 50 basis point hike
  • Participants felt it appropriate to go neutral “quickly”
  • Participants noted that depending on the evolution of the situation, a move towards a stricter policy might be warranted.
  • Participants generally agreed to monthly caps of around $60 billion for Treasuries and $35 billion for MBS
  • Participants generally agreed that caps could be phased in over a period of three months or a little longer
  • All participants stressed the need to remain alert to the risks of further inflation
  • Participants generally agreed that once balance sheet liquidation is well under way, it would be appropriate to consider selling MBS
  • Many noted that one or more 509 basis point increases in the target range might be appropriate at future meetings, particularly if inflation
  • Participants agreed that the Fed is well positioned to begin balance sheet reduction as soon as the FOMC meeting in May
  • Several participants judged the upside risks to inflation from the war to be more pronounced than the downside risks to growth
  • Full text of the minutes

The reflex was lower in the dollar, but there are plenty here for dollar bulls. Discussions on the balance sheet were generally in line with what the markets thought, but the “a lot” comment on 50 basis points underscores the hawkish pressure the Fed is feeling.

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