The Federal Open Market Committee (FOMC) minutes will be released today at 7pm (London). Traders are awaiting the release of the December meeting minutes, as it was the first time that the Fed began tapering their monthly asset purchases, a reduction of $10bn for this month. Prior monthly purchases had totalled $85bn, with a reduction to $75bn for this month.
The flooding of the markets with cheap money, fuelled by central bank QE, and now the removal of the stimulus have been key themes in the financial markets for the last few years. The stimulus was provided to nurture growth, which is believed to have been successful enough to wean the economy off. The tapering timing and scale, led to months of uncertainty in 2013, with the taper finally coming at Bernanke’s finally meeting as Fed Chairman.
Analysts will be looking for any indication as to the potential timeframes of further reductions of the current level of asset purchases and the scale. The vote for and against the December taper, should provide a signal and the likely tone of subsequent Fed meetings.
Following the release there is expected to be considerable volatility in the markets, as traders position themselves depending on the tone of the minutes.