The official line from the Federal Reserve is that inflation will pickup when economic growth begins to rise. What if it doesn’t?
That’s the question Fed officials will have asked during the January 28-29 meeting. Worries about lingering price pressures could weigh on the US dollar. The message on what will happen if inflation softens has been carefully tailored and it will mean another wave of forward guidance rather than tapering but the knee jerk from the US dollar is still likely to be lower.
Different opinions on the true health of the labor market will also be aired in the minutes but overall the FOMC is optimistic and that will shine though. The risks are low for this report but the 2 pm ET (1900 GMT) release could still rankle the market.
