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FOMC minutes, Fedspeak — What to know in markets Friday

Heidi Chung

The Federal Reserve will be in focus Friday when the Federal Open Market Committee (FOMC) releases its December meeting minutes. As far as the near-term outlook is concerned, Deutsche Bank economist Brett Ryan anticipates that the minutes will mostly fall in line with Chair Jay Powell’s message earlier this month that monetary policy is in the right place barring any “material assessment.” Ryan also noted that it will be important to see how much agreement there was among committee members.

“The FOMC minutes, should they show growing support for some form of an averaging inflation targeting strategy, may be more telling with respect to how the Fed's reaction function may begin to evolve next year,” Ryan said.

U.S. Federal Reserve Chairman Jerome Powell speaks at a press conference in Washington D.C., the United States, on June 19, 2019. (Photo by Ting Shen/Xinhua via Getty) (Xinhua/Ting Shen via Getty Images)

As for what to expect from the Fed in 2020, Goldman Sachs economists do not expect any rate cuts in the new year.

“Fed officials appear to have settled on a consensus that monetary policy is ‘in a good place,’ and the bar for a change in either direction over the next year appears high,” the firm wrote in a note to clients on Dec. 27. “Instead, the most interesting monetary policy development might be the conclusion of the Fed’s framework review in mid-2020. We expect the FOMC to adopt average inflation targeting, setting a target of somewhat above 2% for expansions.”

Deutsche Bank also predicts zero rate cuts in 2020, but 50 basis points worth of cuts in 2021.

In addition, a slew of FOMC members will make public appearances Friday. Richmond Fed President Tom Barkin, Fed Governor Lael Brainard, San Francisco Fed President Mary Daly, Chicago Fed President Charles Evans and Dallas Fed President Robert Kaplan are all scheduled to speak.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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