Bank of America Global Research, Morgan Stanley, JP Morgan, and Goldman Sachs preview today's FOMC minutes from the June policy meeting.
BofA: In the June FOMC minutes, markets will focus on the discussion around rate hikes. With nine policymakers penciling in hikes this year, the minutes might give us clues as to whether the Fed is looking to move as early as July. Any discussion of Chair Warsh's task forces will also be of interest. Fed watchers should be prepared for the possibility that Warsh will have the minutes restructured and/or condensed, as was the case with the statement.
Morgan Stanley: We are hoping for clues to the Fed's changing reaction function, in particular around inflation. In his speech at Sintra, Chairman Warsh put the focus on the decline in inflation risks: in these minutes, we are Looking for assessments of oil pass through, shorter-run inflation expectations, and explanation of the high 2026 inflation in the SEP. Also, how much have labor market assessments changed. In his press conference after the June FOMC, Warsh recognized a "stable" labor market with some positive momentum; this contrasted with the April FOMC minutes which noted "stabilization in the labor market" but concerns about "recent low.
JP Morgan: Today's scheduled release of the minutes to the June 16-17 FOMC meeting will be the first minutes in the Warsh era of diminished communications. The revamp of the last post-meeting statement raises the specter of a similar revamp to the minutes. This is a risk, but we see a few factors that could limit how much change we can expect to see...We don't expect material format changes today, but the risks clearly tilt toward less transparency in Fed communications.
Goldman: The FOMC left the funds rate unchanged at 3.5-3.75% and removed the previous forward guidance suggesting cuts from its statement at the June FOMC meeting. But the meeting delivered a hawkish surprise, with nine participants projecting a hike in 2026 (vs. our expectation of three). We suspect that FOMC participants treated the news about a deal with Iran and the reopening of the Strait of Hormuz- which emerged only a few days before the meeting-cautiously. Chairman Warsh also noted earlier this week that "inflation expectations have come down, and inflation risks have come down" at a panel discussion in Sintra, Portugal. We will look for details in the minutes on the assumptions underlying participants' economic outlook and views of the balance of risks at the time.
