Macro 08/16: Summary of FOMC Meeting Minutes

FOMC Meeting Minutes - Inflation fears pull forward rate hike forecasts ahead of Jackson Hole

The minutes of the July FOMC meeting show a more pessimistic view for the market.

Accordingly, the key highlights:

• Members noted “significant upside risks to inflation” and “may need to continue raising rates”

• However, a few members pointed out “prolonged high rates will have a greater than expected impact on the economy”

• Banking sector credit tightening pressure is higher than expected, causing difficulties for the economy

• In particular, the continued decline in commercial real estate values is causing losses for local banking systems

• FED does not see an economic crisis in 2023 but forecasts the economy will “decline mildly” in 2024

GDP growth forecasts from Atlanta FED and St. Louis FED diverge:

Housing starts recovered in July after a sharp drop last month