"Three Things to Watch in Fed Minutes"

From the Wall Street Journal's Real Time Economics:

Minutes of the Federal Reserve’s July policy meeting hit the wire at 2 p.m. today, and there are three key items to watch for: timing, strategy and forward guidance.
The first two of these relate to the Fed’s looming decision on when and how to begin scaling back its $85 billion-per-month bond-buying program.

1) On timing, look for any indication of when the Fed is likely to make the first reduction in its monthly bond purchases – specifically, whether the Fed’s policy-setting committee appears to be leaning toward moving at its September meeting.

The statement released after the July 31 meeting gave little new information beyond Fed Chairman Ben Bernanke’s announcement in June that Fed officials could begin winding down the program later this year if the economy continues to improve as they expect. Economic data since then have been mixed, so that hasn’t helped markets feel confident about when the pull-back—known to some as the taper– will begin.

Minutes from the June policy meeting showed Fed officials held a range of views on the likely timing of the first cut. The July minutes are likely to do the same; the key will be whether it appears a majority of officials are in one camp or the other. Roberto Perli of Cornerstone Macro, in a note to clients, advises to watch out for the use of “qualifiers such as ‘many’ or ‘several’” for officials favoring pulling the trigger in September. “Conversely, if only ‘a few’ members supported that view, the onset of tapering is likely to be postponed.”

2) On strategy, the minutes could provide more information on how the Fed might proceed when it does start reducing its bond purchases....MORE