Forex Flash: Fed minutes reveal heightened debate over policy – UBS

According to Research Analyst Garth Berry at UBS, “The Fed Minutes yesterday revealed that like many other central banks globally, debate over policy is rising, in some cases to boiling point. Despite the launch of numerical targets, it appears that the 2013 FOMC is demanding more flexibility on policy execution.” The dollar found bids as the minutes showed 'a number of' FOMC members saw a need for early slowing of stimulus, regardless of economic performance. However, the Fed as a whole is not in any risk of moving beyond debates, as opposed to the BoE, whose minutes yesterday showed deep splits in policy direction and forward implementation.

Nonetheless the market has already determined that broader policy is only heading in one direction: more stimulus. Whether incorporating a weaker currency officially into BoE policy is fast becoming a moot point if markets have already fully factored this in and allow commensurate adjustment in the economy.