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Fed ‘likely’ to start cutting interest rates in September
(MENAFN) According to the minutes from the Federal Reserve's most recent meeting, released on Wednesday, the central bank is "likely" to start cutting interest rates in September. The minutes indicate that most members of the Federal Open Market Committee (FOMC) believe it would be appropriate to ease monetary policy at their next meeting if economic data continues to align with expectations.
The minutes further noted that FOMC members stressed the importance of conveying that the Committee’s decisions are based on the overall economic data rather than adhering to a predetermined policy path. They emphasized that monetary policy decisions are contingent upon the evolving economic conditions and should be guided by a comprehensive view of the incoming data.
At their July 31 meeting, the FOMC members unanimously decided to keep the federal funds rate unchanged in the 5.25 percent-5.5 percent target range, marking the highest level in 23 years. Following the meeting, Fed Chair Jerome Powell suggested that increased confidence in inflation trends and a robust labor market could make a September rate cut a possibility for the central bank.
Consumer inflation in the US rose by 2.9 percent year-on-year in July, down from 3 percent in June. However, the Consumer Price Index (CPI) increased by 0.2 percent on a monthly basis in July, a rebound from the 0.1 percent decline observed in June. Additionally, the American economy added 114,000 jobs in July, falling short of market expectations of 176,000, and the unemployment rate rose to 4.3 percent from 4.1 percent in June.
The minutes revealed that some FOMC members saw the recent progress in inflation and the increase in unemployment as providing a "plausible case" for a 25 basis point reduction in the target range at the July meeting.
The minutes further noted that FOMC members stressed the importance of conveying that the Committee’s decisions are based on the overall economic data rather than adhering to a predetermined policy path. They emphasized that monetary policy decisions are contingent upon the evolving economic conditions and should be guided by a comprehensive view of the incoming data.
At their July 31 meeting, the FOMC members unanimously decided to keep the federal funds rate unchanged in the 5.25 percent-5.5 percent target range, marking the highest level in 23 years. Following the meeting, Fed Chair Jerome Powell suggested that increased confidence in inflation trends and a robust labor market could make a September rate cut a possibility for the central bank.
Consumer inflation in the US rose by 2.9 percent year-on-year in July, down from 3 percent in June. However, the Consumer Price Index (CPI) increased by 0.2 percent on a monthly basis in July, a rebound from the 0.1 percent decline observed in June. Additionally, the American economy added 114,000 jobs in July, falling short of market expectations of 176,000, and the unemployment rate rose to 4.3 percent from 4.1 percent in June.
The minutes revealed that some FOMC members saw the recent progress in inflation and the increase in unemployment as providing a "plausible case" for a 25 basis point reduction in the target range at the July meeting.
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