Inside the Fed’s May Meeting: The Annotated Minutes

(Bloomberg) -- The Federal Reserve earlier this month shrugged off first-quarter softness in U.S. consumer spending to keep a potential interest rate hike on the table when policymakers meet in June. With the release of minutes from that meeting on Wednesday afternoon, investors will be looking for signals that Fed officials are committed to the tightening path they've laid out for 2017.

Hints about their resolve to lift interest rates will be closely watched, as will any clues on what balance sheet normalization will entail.

The odds of an interest rate hike in June have been above 60 percent for the near entirety of May, save for a marginal drop below that level during the May 17 selloff in global equities, and currently linger close to 80 percent.

The central bank not only plans to lift its policy rates three times this year but may also begin the process of slimming down its $4.5 trillion balance sheet. Federal Reserve officials have stressed the importance of not roiling markets in the same fashion as the taper tantrum of 2013 when they unwind their unconventional stimulus.

In March, when the Fed boosted the target for its policy rate to a range of 75 to 100 basis points, officials mulled whether to cease reinvestment all at once or gradually. In addition, monetary policymakers discussed whether defined quantitative thresholds based on the level of short-term interest rates or more qualitative assessments of the state of the economy should be employed to guide the initiation of balance sheet shrinkage.

With these minutes, we'll see how these debates among Fed officials evolved in May.

Follow along as we annotate their discussion.


To contact the authors of this story: Luke Kawa in New York at, Matthew Boesler in New York at, Alex Harris in New York at