The release of the latest FOMC Meeting Minutes from the decision earlier in the month highlighted policymakers’ willingness to consider raising rates at the next meeting in March should the data remain relatively stable over the near term. Although not necessarily hawkish in nature, the Committee judged that the biggest risks to the outlook remained the prospect of fiscal stimulus and government policies which continue to add considerable uncertainty.
Nevertheless, they did reiterate that unemployment and inflation that met the Committee’s expectations could make it appropriate to raise rates sooner rather than later. Furthermore, inflationary pressures were cited as a potential catalyst to raise rates quicker than anticipated by market participants. Even with the prospect of further tightening, equities managed to extend the latest rally, with Dow futures hitting new heights on Wednesday.