Fed Minutes Indicate Rate Cut is Coming in September

Federal reserve building, Washington DC. USA
Federal reserve building, Washington DC. USA. Image by tanarch/Depositphotos

On Wednesday, the Federal Reserve shared minutes from the July meeting of its Federal Open Market Committee. The minutes show that most officials expressed willingness to make a rate cut in September if the inflation data continues to be favorable.

 According to the summary, “the vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting.”

The Fed decided to keep the benchmark rate unchanged at the July meeting by an anonymous vote. At 5.3%, the rate hasn’t moved in more than a year and remained at the highest level in 23 years.

But, despite the anonymous vote to keep the rate at its current level, some officials showed a willingness to proceed with rate cuts at the July meeting. The Fed minutes state that several officials “observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this meeting or that they could have supported such a decision.”

Traders are already betting that a rate cut is coming in September, with odds being placed at 100%. However, there is less clarity about how significant the rate cut will be and whether more rate cuts will take place by the end of the year. This could change on Friday when Fed chair Jerome Powell is scheduled to make his speech at the Fed’s annual conference of central bankers in Jackson Hole, Wyoming.

Jas M
Jasmin can write about almost everything except about himself. All you need to know is that he likes music, Nutella stuffed pancakes and sleeping till noon on Sundays.