In December, the Federal Reserve delivered its third interest rate hike of 2017 and maintained plans to increase rates three times this year. However, two Fed regional bank presidents — Neel Kashkari of Minneapolis and Chicago's Charles Evans — dissented from the decision, each citing concerns about below-target inflation.
With today's release of the minutes of that meeting, we'll get a sense of whether worries among Fed officials about persistently sluggish price pressures have approached a tipping point.
Markets are pricing in more than two rate increases of a quarter percentage point from the U.S. central bank over the next 12 months. The December dot plot implies that there's a loose consensus among Fed officials that by 2020, rates will need to be raised to levels designed to restrain economic activity — potentially risking a recession in the process.
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In an essay explaining his dissent, Kashkari added that the signals emanating from the bond market — the slimming spread between short- and longer-term yields — suggested "the odds of a recession are increasing." Other monetary policymakers, including Dallas Fed chief Robert Kaplan, have since expressed unease about this flattening of the Treasury curve.
And who knows, maybe we'll even get a reference to cryptocurrencies in the minutes. Bitcoin rose more than 50% in the two weeks prior to the meeting.
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