Coverage: Varying messages of the Fed minutes

The Federal Reserve Board had several messages about the state of the U.S. and global economies in their latest minutes. Some chose to focus on rates and potential increases while other organizations thought the state of economies was the most important piece of this release.

Jon Hilensrath and Brian Blackstone of The Wall Street Journal focused their story on weak growth in global markets:

Federal Reserve officials, worried about weak growth overseas, are endorsing new measures by foreign officials—most notably at the European Central Bank—to stimulate their economies.

Fed officials rarely comment on the decisions taken by foreign central banks and have generally played down risks to domestic growth emanating from abroad. Yet minutes of the Fed’s Dec. 16-17 policy meeting included several references to the urgency U.S. officials and market participants are placing on new policy actions to counteract slow growth outside the U.S.

The insight into the Fed’s thinking comes as new figures released from the eurozone on Wednesday showed consumer prices fell 0.2% in December from a year earlier, a larger decline than economists had expected and the first drop since October 2009. Falling prices in Europe are in part a result of tumbling oil prices and a symptom of weak demand in Europe.

Other global soft spots abound: Economic output in Japan contracted in the second and third quarters of 2014 and growth in China has disappointed, putting added downward pressure on commodities world-wide.

Bloomberg’s Christopher Condon and Jeff Kearns began their story talking about when a rise interest rates would likely occur:

The Federal Reserve confirmed that being “patient” on interest rates means no increase before late April, while expressing concern that inflation might continue to linger below its goal.

Most members of the Federal Open Market Committee thought a patient stance “indicated that the committee was unlikely to begin the normalization process for at least the next couple of meetings,” according to minutes of the Dec. 16-17 gathering released today in Washington.

The minutes indicate broad support for Chair Janet Yellen’s assessment of the likely timing of the first interest-rate increase since 2006 that she delivered at a press conference following the meeting. Officials also discussed risks from overseas, including a plunge in oil prices, and concluded they were largely offset by domestic strength.

“The base case for policy remains that sometime in the middle of the year we should begin lifting off,” said Roberto Perli, a former associate director of the Fed’s Division of Monetary Affairs, who is now a partner at Cornerstone Macro LP in Washington.

Binyamin Appelbaum wrote for The New York Times that official struck an optimistic tone during the meeting:

 Federal Reserve officials spoke with growing optimism about the strength of the economy at the December meeting of the Fed’s policy-making committee, according to an official account published on Wednesday.

Some officials cited the strength of recent economic data, including surveys of consumer and business confidence and the growth of payrolls, as evidence that growth may finally exceed their expectations after years of disappointment.

Others said they expected a “quite large” boost from falling oil prices.

The signs of newfound optimism were tempered, however, by concern that the weakness of the global economy, and the anemic response of foreign governments, could weigh on domestic growth.

And the tone of the December meeting continued a pattern in which the Fed entered almost every year since the financial crisis expressing confidence that the economy was finally gaining momentum.

As a result, the account of the meeting of the Federal Open Market Committee made clear that Fed officials remain determined to err on the side of caution by continuing to suppress interest rates. Most officials do not expect to raise the Fed’s benchmark rate before the middle of the year.

Jeff Cox of CNBC began his story talking about inflation and how it isn’t a concern for policymakers at this point:

Inflation wouldn’t have to move off its current subdued levels for the Federal Reserve to start hiking rates, according to minutes released Wednesday from its most recent meeting.

The December gathering of Federal Open Market Committee did not produce a rate hike, but some members indicated that conditions are changing. Minutes indicated, however, that using the world “patient” in the statement following the meeting would signal that the Fed wasn’t ready to hike for at least the next couple of meetings—a term Chair Janet Yellen told the media afterward indeed meant two.

Coverage of the December minutes was varied with many organizations choosing to focus on various pieces of the story. It’s interesting to see what some think will be the driving factor for a decision to raise rates and when that hike might come. One thing is clear; the Fed is juggling a variety of factors that could be contradictory. It’s a fine line keeping the economy moving forward at the proper pace.