Wednesday s minutes reflect a policy meeting held before the release of data showing a strong U.S. nonfarm payrolls report as well as the higher-than-expected consumer and producer prices for January. Analysts said the minutes should reinforce the Fed s stance of being patient about starting its easing cycle and validate the market s pushing out of rate cuts to the June meeting, instead of March.
The consumer price index (CPI) increased 0.3% last month after gaining 0.2% in December amid a surge in the cost of shelter, the Labor Department said on Tuesday. In the 12 months through January, the CPI increased 3.1%. Economists polled by Reuters had forecast the CPI would gain 0.2% on the month and 2.9% on a year-on-year basis.
Markets now expect the Federal Reserve to cut benchmark interest rates by 127 basis points by year-end, down sharply from more than 160 basis points expected a month ago. Futures markets are now pricing in just a 21% chance of a rate cut after the Fed s March meeting, down from a nearly 80% chance in early January, according to CME s FedWatch Tool.