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Fed Minutes Will Be Parsed for News on Balance Sheet Plans

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IG analyst Joshua Mahony said: "With the big European data out of the way, the focus now shifts to the USA, where the FOMC minutes will bring rate expectations to the forefront of investors' minds".

In a press conference at the time, Fed Chair Janet Yellen described a recent decline in inflation as temporary and the central bank kept its forecast of one more rate rise this year and three the next.

The Fed voted in June to raise short-term rates by a quarter point to a range of 1 to 1.25 percent, the third quarter in a row the bank has lifted rates. The minutes said "most participants viewed the recent softness" in inflation indicators "as largely reflecting idiosyncratic factors".

At the June meeting, the Fed gave a clear outline of its plan this year to reduce its portfolio but gave no precise timing.

US stock prices were up slightly at the close of trade while yields on USA government debt dipped. This has occurred as the stock market has also increased in value. But she said the Fed would remain "attentive" to the fact that inflation continues to underperform their targets. "But I do think that they're concerned that asset prices have gone a little too far too fast, and have been supported by easy monetary policy conditions".

"No one wants to say the "b" word - 'bubble, '" said Michael Arone, chief investment strategist at State Street Global Advisors.

Cramer said he still expects to see a rate hike in September. "So it might be time to curtail some of that". "A few participants expressed concern that subdued market volatility, coupled with a low equity premium, could lead to a buildup of risks to financial stability". Any profit the Fed has at the end of the year must be sent to the U.S. Treasury. The increase of 0.25 percentage point raised the rate to between 1% and 1.25%.

The Fed's decisions to raise the cost of borrowing have been slow to filter into financial markets, said Mark Hamrick, senior economic analyst of Bankrate.com.

The plan, approved in June, involves the Fed slowly reducing its holdings by gradually allowing an increasing amount of proceeds from maturing securities to be run off the books each month.

Fed officials updated their balance-sheet policy in the gathering, laying out a path of gradual reductions with caps.

Several Federal Reserve officials wanted to start reducing the trillions of dollars of assets held by the central bank "within a couple of months" to accelerate the return to a more normal monetary policy after years of battling the Great Recession, according to an account released Wednesday of their most recent meeting.

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