Minutes of the January 29/30 FOMC meeting were all in all in-line with the messages delivered by the statement and Chair Jerome Powell’s press conference. FOMC members supported the change in forward guidance. That is, Fed would now “be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate.”

Nevertheless, the minutes also noted that “some participants believed “if the economy evolved as they expected, they would view it as appropriate to raise the target range for the federal funds rate later this year.” This view keeps the case for another hike in 2019 alive.

Regarding the balance sheet rolloff plan, “almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year.” And, options on “substantially slowing” the runoff were presented during the meeting.

Full FOME Jan minutes here.

In an interview overnight, Boston Fed President Susan Collins described her “baseline” expectation for rate path as being “similar” to Fed’s latest projection, which anticipates a total of 75 basis points cut in interest rates within the year.

She highlighted the importance of additional data to support the decision for the timing of the first rate cut. “I will need more, additional evidence” to confirm that inflation is consistently trending towards Fed’s 2% goal, she stated.

Nevertheless, Collins noted that waiting for inflation to reach the target before acting “would be waiting too long,” suggesting a proactive yet measured stance in adjusting policy.

In a WSJ interview, Kansas City Fed Esther George said that with inflation at at 7.5% in January, and the benchmark interest a rate near zero, Fed’s policy is “out of sync”. But she said it’s too soon to say if Fed should hike by 50bps in March. She also hasn’t form a view on how much interest rate has to go up this year.

“What we have to do is be systematic,” George said. “It is always preferable to go gradual…Given where we are, the uncertainties around the pandemic effects and other things, I’d be hard-pressed to say we have got to get to neutral really fast.”

“If we get to March and the data says we should be talking about that [a half-point rate increase], I’m sure that will be in play, but I’m not sure that is the answer, per se, to how we get there,” George added.

She also dismissed the idea of holding an emergency FOMC meeting to raise interest rate. “I don’t know that I’d call the markets reacting to data an emergency here, because frankly, in my own forecast of looking where inflation was moving, the print was not a surprise,” she said.