From Torsten Sløk, Ph.D.:
When I discuss the timing of Fed liftoff with clients it is essentially a debate about how much weight the FOMC puts on inflation and how much weight they put on the unemployment rate. If you believe they put a high weight on inflation, then they will not raise rates anytime soon. If you think they put a high weight on the unemployment rate, then they will hike soon. One way to quantify what the FOMC thinks is important is to look at how many times they mention inflation and (un)employment in the FOMC minutes, see chart below. From 2004 to 2007 the FOMC worried mainly about inflation. But since 2008, the FOMC has talked more and more about the unemployment rate and the labor market. We get new FOMC minutes tomorrow and we believe they will continue to show a picture of the Fed on track to hiking rates this summer, see also our latest GEP.
Source: Torsten Sløk, Ph.D. Deutsche Bank Securities
