5 Things To Watch For In The Fed's Minutes

August 17, 2016 | 8:00 am ET Champaign Williams

The US Federal Reserve held off on interest rate hikes last month even though committee members say the US economy is less susceptible to risks and the labor market is tightening.

But there has been much speculation that a rate increase will occur before the end of the year, possibly as early as next month. Minutes from the July 26-27 meeting are to be released this afternoon at 2pm. Here's what to watch for, according to the Wall Street Journal.

Next Rate Increase?

Financial markets and Fed officials have become out of sync as of late. Though the Fed promises another rate hike, investors remain convinced it will not occur this year. Further evaluation of the minutes could reaffirm the Fed's position and investors expectations for a move in 2016.

Brexit

The Fed meeting in July was the first following the UK's vote to leave the EU, which triggered several days of volatility in the global marketplace. Minutes could offer additional insight into the effects of Brexit on the US economy.

Inflation

The Fed remains confident the labor market will push inflation to central banks' 2% target. But uncertainty following the last meeting has crept in as Fed Chair Janet Yellen said falling inflation has been a cause for concern. The minutes will allow us to further evaluate the legitimacy of these concerns.

Balancing Risks

Economists are closely evaluating the Fed's decisions, or lack thereof, and how the committee is interpreting the risks facing the US economy. Sometimes policymakers are confident the economy will outperform forecasts, and others they're worried about the opposite. If the risks have in fact dimmed, we're more likely to see a rate hike this year. A closer look at the minutes will help determine the risks facing the economy.

Election Effects

The Fed still insists the looming elections will have no impact on the economy, but economists say otherwise, projecting the Fed won't be inclined to move during the uncertainty of the race. It's not likely the Fed will discuss the meeting in its minutes, but it's definitely something to look into. [WSJ]