OPINION
Market Rating Before FOMC MeetingJan 31
Markets are focused on FOMC minutes
Minutes of the Federal Open Market Committee meeting dated July 27 - 28, in which the Federal Reserve members didnot change the interest rate and its asset purchase program, will be released tomorrow at 20:00 (GMT+2).
The Committee announced that they created two standing repurchase agreement (repo) facilities to support the effective implementation of monetary policy and regular market functioning.
The Federal Reserve will conduct daily overnight repo operations against Treasury securities, agency debt securities, and agency mortgage-backed securities, with a maximum operation size of $500 billion. The minimum bid rate for repos under the facility will be set initially at 25 basis points.
Noting that economic activity and employment indicators continued to recover with the acceleration of the vaccination process and the monetary and financial supports provided at the meeting, the Committee noted that there was an improvement in the sectors that were adversely affected by the pandemic, but that it has not yet fully recovered compared to the pre-pandemic period.
Confirming that it is committed to the maximum employment target, the FOMC pointed out that while the fluctuation of inflation above the 2 percent target is tolerated, the recent increase in coronavirus cases poses a risk to the economic outlook.
As the price pressures on the inflation outlook became evident, expectations for a reduction in the asset purchase program and tapering statements were received from the members of the Federal Open Market Committee began to emerge in the markets, while the Bank did not give a clear signal regarding the expansion program by pointing to the labor market.
On the other hand, downside risks in the economic outlook as a result of the increasing number of cases globally, especially in the USA, due to the coronavirus mutation that emerged in India and called the Delta variant are also on the Committee's agenda.
In this sense, at the July meeting, how the Committee evaluated the economic effects of the delta variant, and under what conditions a formula or equation against risks was taken into account, will be sought by the markets in the minutes to be released tomorrow.
In addition, we will look for the ideas of the Committee on expectations of the rise of inflation and how tapering supporters will behave if this rise becomes permanent.
The Committee announced that they created two standing repurchase agreement (repo) facilities to support the effective implementation of monetary policy and regular market functioning.
The Federal Reserve will conduct daily overnight repo operations against Treasury securities, agency debt securities, and agency mortgage-backed securities, with a maximum operation size of $500 billion. The minimum bid rate for repos under the facility will be set initially at 25 basis points.
Noting that economic activity and employment indicators continued to recover with the acceleration of the vaccination process and the monetary and financial supports provided at the meeting, the Committee noted that there was an improvement in the sectors that were adversely affected by the pandemic, but that it has not yet fully recovered compared to the pre-pandemic period.
Confirming that it is committed to the maximum employment target, the FOMC pointed out that while the fluctuation of inflation above the 2 percent target is tolerated, the recent increase in coronavirus cases poses a risk to the economic outlook.
As the price pressures on the inflation outlook became evident, expectations for a reduction in the asset purchase program and tapering statements were received from the members of the Federal Open Market Committee began to emerge in the markets, while the Bank did not give a clear signal regarding the expansion program by pointing to the labor market.
On the other hand, downside risks in the economic outlook as a result of the increasing number of cases globally, especially in the USA, due to the coronavirus mutation that emerged in India and called the Delta variant are also on the Committee's agenda.
In this sense, at the July meeting, how the Committee evaluated the economic effects of the delta variant, and under what conditions a formula or equation against risks was taken into account, will be sought by the markets in the minutes to be released tomorrow.
In addition, we will look for the ideas of the Committee on expectations of the rise of inflation and how tapering supporters will behave if this rise becomes permanent.
