What To Look For In FOMC Minutes

FOMC (Federal Open Market Committee) meetings lately have been a very vital event for the markets. With the Fed in favor of reducing the quantitative easing, the equity and bond markets worldwide, particularly in the emerging markets and specifically in India have reacted very heavily. With the rupee making new low, the Fed’s meeting would have a very serious impact on the financial markets. One such meeting is scheduled tonight in the USA and one should know what one to see in FOMC's press release.

Fed has been making the markets realize that the QE is not lasting forever and some day in future it is going to stop it. With such talks rising in the Fed meetings, one must know the signals that the press release would have. Also how many members are now in favor of tapering the QE would give an indication of the likelihood of QE being stopped earlier than expected. One should see how the members express the confidence in the US economy.

Also to note is what Fed says about the interest rates and the inflation expectations as both of them would send the signal about the growth expectations to the markets. Lately the US economy has been doing well and hence expression of higher confidence in the economy would mean that tapering of QE may happen earlier than expected.

The Fed has been saying that it will really start QE tapering when unemployment rate touches 6.5%. If there is any change in this threshold level then should also be a signal to the market.

The markets tomorrow will take cues from this and hence one should not take any intra day position without knowing the outcome of the FOMC.