In a note to investors, Pimco managing director and global strategic adviser, Richard Clarida, said the Federal Open Market Committee’s (FOMC’s) decision not to act before the Brexit vote was justifiable.
However, the minutes fail to show which market circumstances would prompt the Fed to take action, he said.
“The minutes dutifully convey why the FOMC did not hike in June, but what insights do they provide about the conditions that will need to be met before the committee can agree on the next hike? Very few,” he said.
At the very least, the Brexit vote means a July interest rate hike is “off the table”.
Mr Clarida also said that weak labour market data was mentioned as one reason for holding interest rates steady, despite the committee paying lip service to “sentiment that the FOMC should not allow one soft US labor market print to have an outsized influence” on plans for normalisation.
He noted that the word ‘uncertainty’ was used no less than 13 times, something he argues “conveys palpable anxiety over how uncertain the committee is about where it is today or where it’s heading tomorrow”.
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