Latest FOMC Minutes More Hawkish Than December's, But...

The minutes of the January 31/February 1 FOMC Meeting are more hawkish than the minutes of the December meeting.  There is much more discussion of when to tighten and the majority appears to be comfortable hiking rates soon.  But, the consensus (or leadership) still favor a gradual approach, which may be why this more hawkish sentiment was not captured in the FOMC Statement following the meeting.  While a rate hike in March is not a slam dunk, the odds of one -- or in May -- would appear to be high.

Here are relevant extracts.  All but one are from the section of the Committee's views.  The most dovish extract is from the section on the Committee's Policy Action and thus is presumably more important than the others.

January 31/February Meeting

Hawkish:  note the word "many," meaning this is consensus.  Also, the data just have to be in line with expectations -- likely easily done given the boost to the economy from the warm winter.  A caveat is the word "might" -- so still not a slam dunk for March.
In discussing the outlook for monetary policy over the period ahead, many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the Committee’s maximum-employment and inflation objectives increased.

Moderately Hawkish -- particularly saying "at an upcoming meeting."
A few participants noted that continuing to remove policy accommodation in a timely manner, potentially at an upcoming meeting, would allow the Committee greater flexibility in responding to subsequent changes in economic conditions.  

Mildly Hawkish -- Hypothetical.   In December "many" participants thought the risk of undershooting the normal rate of unemployment "had increased somewhat."
Several judged that the risk of a sizable undershooting of the longer -run normal unemployment rate was high, particularly if economic growth was faster than currently expected. If that situation developed, the Committee might need to raise the federal funds rate more quickly than most participants currently anticipated to limit the buildup of inflationary pressures.

Dovish -- Found in the discussion of the Committee's Policy Action, so more important than the comments in the Committee's views.
Many members continued to see only a modest risk of a scenario in which the unemployment rate would substantially undershoot its longer -run normal level and inflation pressures would increase significantly.
 
Dovish -- But only a "few others."
However, with inflation still short of the Committee’s objective and inflation expectations remaining low, a few others continued to see downside risks to inflation or anticipated only a gradual return of inflation to the 2 percent objective as the labor market strengthened further.

A Hawkish Step That Could Hurt Long-End of Treasury Curve.   In December, several participants said "circumstances that might warrant changes to the path for the federal funds rate could also have implications for the reinvestment of proceeds from maturing Treasury securities and principal payments from agency debt and mortgage-backed securities."  In the latest meeting, there was general agreement that discussion of these possible conditions should begin.
Participants also generally agreed that the Committee should begin discussions at upcoming meetings about the economic conditions that could warrant changes in the existing policy of reinvesting proceeds from maturing Treasury securities and principal payments from agency debt and mortgage-backed securities, as well as how those changes would be implemented and communicated.

These extracts are more hawkish than the  tentative sentence in the December minutes:

December Meeting
Several members noted that if the labor market appeared to be tightening significantly more than expected, it might become necessary to adjust the Committee’s communications about the expected path of the federal funds rate, consistent with the possibility that a less gradual pace of increases could become appropriate.