• FOMC minutes … unsurprisingly hawkish
• Fed appears set on hiking the policy rate by either 50bps or 75bps at the upcoming meeting later this month
• a restrictive policy stance was seen as warranted given the strength of inflation and tightness in the labour market
• the minutes flagged the possibility of an “even more restrictive stance” if elevated inflation pressures were to persist
• there was no sign in the minutes that the Fed is thinking of wavering from its strategy, even with a growth slowdown in train and equity markets in ‘bear market’ territory … participants “recognized that policy firming could slow the pace of economic growth for a time, but they saw the return of inflation to 2% as critical to achieving maximum employment on a sustained basis.”

Daily USD index:

If the Fed minutes were honest they would say, “Powell already leaked to CNBC and the WSJ that we’re hiking 75 bps, so our hands are tied”.

I think risk-buyers are cautious until the headlines hit on fear that there will be some very-hawkish sounding words in there. I wouldn’t be surprised if we see a risk rally afterwards, no matter what they contain because they’re already old news.

• Consumer inflation expectations surged in Canada, hitting fresh highs in the short-term and up “significantly” over the long-term … bolstering calls for a very rare 75-basis point rate increase

With remarks from Andrew Grantham, senior economist at CIBC Capital Markets:

• “In particular, long-term (consumer) inflation expectations increased dramatically,”
• adding the across-the-board jumps were “not good news” for the central bank

A 75bp rate hike is expected at the next Bank of Canada monetary policy meeting,

• statement due on Wednesday, July 13 at 1400 GMT
• It will be accompanied by an updated Monetary Policy Report
• Bank of Canada Governor Macklem will speak at this press conference, following at 1500 GMT

• Prior was 0.75%
• The benchmark rate hiked to 1.25% from 0.75%
• Economy is experiencing high growth and a tight labor market
• Inflation is ‘well above’ the upper bound of the target range
• Notes that expectations for three years out have converged to midpoint of the range
• Forecasts 5% growth in 2022 vs 5.5% prior. Sees 3.5% next year
• Expects inflation at 2.4% in 2023
• Forecasts benchmark rate at 2.75% in one year vs 1.50% previously

Some economists were looking for just 25 basis points. Israel’s  inflation  is expected at 4.5% this year, which is high but below most developed economies.