Investors will learn more Wednesday about why Federal Reserve officials did an apparent U-turn in policy three weeks ago when they signaled a much easier stance regarding interest rates.
Minutes from the Jan. 29-30 meeting of the policymaking Federal Open Market Committee will be released at 2 p.m. ET. At the meeting, the committee voted not to increase the benchmark interest rate, but signaled a "patient" approach to future hikes. Fed Chairman Jerome Powell said afterward that it would take a shift in data to convince him that more moves would be needed.
Market participants will be digging closely through the meeting summary for clues on how the Fed views its interest rate framework, the assessment on the economy, and the plans it has for the $3.8 trillion in bonds it is holding on its balance sheet.
While a minutes release might seem an otherwise mundane dig through monetary policy, the Powell Fed has put a special emphasis on communication. The chairman now will hold news conferences after each meeting to explain Fed actions to the public, and he has kept up a busy schedule meeting with lawmakers on Capitol Hill.
"More communication is better," Bill English, a 20-year Fed veteran and current professor at the Yale School of Management, said in an interview. "Things can be misunderstood and communication can go badly, but the response to that should be more communication and trying to clarify, and not communicating less. The world of a generation ago when the Fed didn't communicate much about monetary policy at all isn't actually a very desirable world for doing monetary policy."
Fed officials have been pretty clear lately about their intentions on interest rates. Less certain is what the central bank will do with the balance sheet.