Federal Reserve meeting minutes to be released tonight; a September rate hike may only be the beginning of a new round of tightening.

BlockBeats news, October 7th, the minutes of the Federal Reserve's September meeting will be released at 2 a.m. Beijing time on Thursday. The market focus may not only be on the basis for the decision to raise rates by 25 basis points in September, but also on how officials judge the restrictiveness of the current financial environment and whether further rate hikes are needed in the future.

The Chicago Fed National Financial Conditions Index shows that U.S. financial conditions have continued to ease since the fall of 2022 and are still on the looser side of the historical range; the option-adjusted spread of the ICE BofA U.S. High Yield Index is also at a historically low level. Michael Kramer, founder of Mott Capital Management, believes that if the Federal Reserve focuses on the above indicators, the current financial environment may still not be enough to be defined as clearly restrictive policy.

At the same time, U.S. headline PCE rose 3.4% year-over-year in August, while core PCE rose 3.0% year-over-year. The current effective federal funds rate is about 3.9%, corresponding to a real interest rate of only about 50 basis points (calculated by headline PCE) or 90 basis points (calculated by core PCE), significantly lower than the real interest rate level during Kevin Warsh's term in mid-2006.

Kramer said that if the meeting minutes can disclose officials' discussions on financial conditions, real interest rates, and the pace of inflation decline, it may help the market judge whether the September rate hike was merely a one-time adjustment or the starting point of a new round of tightening cycle.