FOMC Minutes: Recovery faster than expected from its depressed second Q2 level

Minutes of the FOMC’s September 15-16 meeting showed on Wednesday that participants noted that the incoming data revealed that economic activity was recovering faster than expected from its depressed second-quarter level.

Market reaction

The US Dollar Index showed no immediate reaction to the FOMC’s publication and was last seen losing 0.25% on the day at 93.62.

Key takeaways as summarized by Reuters

“Participants noted that business investment, which had plummeted in the second quarter, appeared to have begun to turn around.”

“Al­though business contacts indicated that overall business activity had been stronger than they expected, it remained well below pre-pandemic levels.”

“Several participants agreed it was appropriate to incorporate key elements of the consensus statement into the post-meeting statement, they preferred to retain forward guidance similar to that provided in recent FOMC statements.”

“Many participants said their outlook assumed additional fiscal support.”

“Many participants said that if future fiscal support was significantly smaller or came significantly later than they expected, the pace of recovery could be slower than anticipated.”

“These participants judged that given very low long-term rates, there did not appear to be a need for enhanced forward guidance at this juncture or much scope for forward guidance to put additional downward pressure on yields.”

“Participants generally expected spending on services to remain subdued for some time, restraining the pace of recovery.”

Credit: FX Street

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