The minutes of the 15-16 December FOMC meeting, where the Fed delivered its first hike since June 2006, were more dovish than the statement and Janet Yellen's tone at the press conference. The minutes reveal that, although the hike was unanimous, it was a 'close call' for 'some' FOMC members. In other words, not all FOMC members are as confident as Yellen sounded at the press conference. In particular, the subdued core inflation seems to be a major concern for the most dovish members. The main reason they supported the tightening anyway was the strong development in the labour market as monetary policy works with a lag.  

The minutes support the view that the majority of the voting members would like to take a cautious stance in the normalisation of monetary policy and monitor incoming data before moving on with the next hikes to begin with. While the Fed will be worried about how the real economy reacts to the tightening of monetary policy in the short term, it will also be worried about 'falling behind the curve' in the medium term. If the labour market continues to tighten as expected, it is believed that the Fed is likely to increase its hiking pace in order to ensure that the economy does not overheat.  

"We continue to expect three hikes in 2016 and four hikes in 2017, i.e. a total of seven hikes by year-end 2017. We still believe the median 'dots' from the latest projection in December (released alongside the statement) send a little too hawkish a signal. The median 'dots' signal four hikes both this year and next year, i.e. a total of eight hikes by year-end 2017. However, the median 'dots' hide that most individual 'dots' were lowered and that most voting FOMC members have a dovish-to-neutral stance, in our view", notes Danske Bank.

The minutes are more aligned with recent Fed communications (including speeches and interview), both before and after the meeting.  As the Fed targets a core inflation measure, its monetary policy does not depend much on the oil price development as core inflation is affected only indirectly by commodity prices. The minutes support Yellen's statement in the press conference that it would be enough for the Fed to see the oil price stabilising at current levels.