Rates loom large in April Fed minutes

May 18, 2011

We’ve created a word cloud of the minutes of the April 26-27 FOMC meeting to try to divine what’s foremost in the mind of Fed members. Words used more often in the minutes translate into larger words within the cloud. As you can see below, inflation was by far the most used word in the minutes, however there’s a new word competing for top billing – “rate.”

This fits in with news that that most Federal Reserve officials would prefer to raise benchmark interest rates before selling assets when the time comes to tighten policy. Evidence that the Fed is indeed discussing exit strategy can be found in the fact that the word “sales” also crops up in the new cloud, although it’s not as large as the word rate.

For comparison below is a cloud based on the last set of FOMC minutes, from a meeting held on March 15. Note that the word rate is much smaller in that cloud and the word sales doesn’t seem to appear at all.

You might remember that we preformed a similar analysis of what was said during Ben Bernanke’s first post rate-decision press conference back on April 27. At the time we were struck by how much larger the word inflation was vs. any mention of unemployment or jobs. As you can see by comparing that cloud (below) to those above though it seems that Fed members talk even less about unemployment when they’re behind closed doors.

See any other interesting patterns? Let us know in the comments.

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Great stuff!

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