(Bloomberg) — Here's what to look for when the Federal Reserve releases minutes from the Federal Open Market Committee's Jan. 27-28 meeting at 2 p.m. Wednesday in Washington.
– The limits of patience. The minutes will probably reveal a "tightening bias" at the meeting, which will have been reinforced the following week by news of stronger-than-forecast jobs growth in January, said Thomas Costerg, an economist at Standard Chartered Bank in New York.
The FOMC's statement after its January meeting reiterated the previous month's stance that the committee would be "patient" in deciding when to begin raising interest rates, and it described job gains as "strong." A Labor Department report on Feb. 6 showed payrolls advanced by 257,000 in January, capping the biggest three-month increase in 17 years.
"If you read the minutes in conjunction with the payroll data, it may pave the way for the removal" of the word "patient" from the statement in March in order for the committee to keep the door open to a mid-year rate increase, Costerg said. Fed Chair Janet Yellen has said "patient" implies the Fed won't raise rates for at least the next two meetings.
– Inflation outlook. Watch for indications policy makers are resolved to look beyond the current weakness in inflation as they consider when to tighten.
"Anything that gives us a sense of how willing they would be to hike, even against a low-inflation backdrop, will be important," said Michelle Girard, chief U.S. economist at RBS Securities Inc. in Stamford, Connecticut.
Inflation goal
The Fed's preferred measure of inflation, based on personal consumption expenditures, rose 0.7 percent in December from a year earlier and hasn't been above the central bank's 2 percent target since March 2012. Even so, several Fed officials have said the U.S. central bank's first interest-rate increase in almost a decade may come as soon as June.
"The big question in everybody's mind is: Can they raise interest rates without more tangible evidence, either in terms of wages or with the inflation numbers, that things are moving in the right direction?" Girard said.
– Labor slack: The minutes will probably show continued debate over the quality of job gains and the implications for wage growth, Girard said.