The Jan. 29-30 FOMC meeting minutes have been released and energy is a hot topic in it. Oil is mentioned 11 times; energy, 17 times. Meanwhile, home/homes is mentioned 11 times; house, 6; mortgage/mortgages, 9; housing, 24. Food is mentioned twice. The report is roughly 12,000 words. Here are comments relating to oil/energy prices. Generally, the FOMC doesn’t expect energy prices to go higher but concedes that the futures market has been consistentily wrong. (Note: Discussion of “PCE inflation” is personal consumption expenditure, including food and energy; the “core PCE inflation” figures exclude food and energy. --”Utilities output climbed for a second consecutive quarter, and mining output was boosted by increases in natural gas extraction and in crude oil.” --”Spending on services rose solidly in November (the most recent month available), led by energy services and commissions paid to stockbrokers, but warmer-than-usual temperatures in December likely damped expenditures for energy services in that month.” --”Readings on core inflation had improved modestly during the year, but elevated energy and commodity prices, among other factors, might put upward pressure on inflation.” --”Real disposable personal income was little changed in the fourth quarter, held down by higher consumer energy prices. Also, the wealth-to-income ratio ticked down in the third quarter, and appeared likely to decline again in the fourth quarter, as equity prices had fallen since the end of the third quarter and available indicators pointed to continued declines in house prices in the fourth quarter. In December, readings on consumer sentiment remained at relatively low levels by historical standards.” --”The U.S. international trade deficit widened slightly in October and then more substantially in November, as increases in imports in both months more than offset increases in exports. The increases in imports almost entirely reflected a jump in the value of imported oil.” --”In Japan, the estimate of real GDP growth in the third quarter was revised down, and business sentiment declined in December amidst concerns about high oil prices.” --”In the United States, headline consumer price inflation stepped up noticeably in November and December from the low rates posted in the summer. Part of the increase reflected the rapid rise in energy prices, but prices of core personal consumption expenditures (PCE) also moved up faster in those months than they had earlier in the year.” --”Consistent with the shift in the economic outlook, the revision in policy expectations, and the reduction in the target federal funds rate, yields on nominal Treasury coupon securities declined substantially over the period since the December FOMC meeting. The yield curve steepened somewhat further, with the two-year yield dropping more than the ten-year yield. Near-term inflation compensation increased in early January amid rising oil prices, but it retreated in later weeks, along with oil prices, and declined, on net, over the period.” --”However, with inflation expectations anticipated to remain reasonably well anchored, energy and other commodity prices expected to flatten out, and pressures on resources likely to ease, participants generally expected inflation to moderate somewhat in coming quarters.” --”Participants agreed that the inflation data that were received since the December meeting had been disappointing. But many believed that the slow growth in economic activity anticipated for the first half of this year and the associated slack in resource utilization would contribute to an easing of price pressures. Moreover, a leveling-off of energy and commodity prices such as that embedded in futures markets would also help moderate inflation pressures. However, some participants cautioned that commodity prices had remained stubbornly high for quite some time and that inferences drawn in the past from futures markets about likely trends in such prices had often proven inaccurate.” --”The higher-than-expected rates of overall and core inflation since October, which were driven in part by the steep run-up in oil prices, had caused participants to revise up somewhat their projections for inflation in the near term.” --”Regarding risks to the inflation outlook, several participants pointed to the possibility that real activity could rebound less vigorously than projected, leading to more downward pressure on costs and prices than anticipated. However, participants also saw a number of upside risks to inflation. In particular, the pass-through of recent increases in energy and commodity prices as well as of past dollar depreciation to consumer prices could be greater than expected.” Here’s the full report: fomcmeetingminutes13008.pdf --Nissa Darbonne, Executive Editor, Oil and Gas Investor, A&D Watch, Oil and Gas Investor This Week,