Most Federal Reserve officials agreed last month that they are likely to cut interest rates at their next meeting in September as long as inflation remains subdued.
of Minutes The July 30-31 Fed meeting report, released on Wednesday, said a “majority” of policymakers “expressed the view that if data continue to emerge broadly in line with expectations, it would likely be appropriate to ease policy at the next meeting.”
Policy makers left interest rates unchanged at 5.3% in July, the highest level in nearly a quarter century, and have remained there for more than a year.
Wall Street traders were already considering it a certainty that the Federal Reserve would announce its first interest rate cut in four years in mid-September. According to futures prices.
A cut in the Federal Reserve’s benchmark interest rate could ultimately lead to lower interest rates on auto loans, mortgages and other consumer loans, helping to lift stock prices.
Federal Reserve meeting minutes can reveal important details behind policymakers’ thinking, particularly how views on interest rates are evolving.
Further guidance on the Fed’s future actions can be found at Chairman Jerome Powell gives long-awaited speech Friday morning at the annual symposium of central bankers in Jackson Hole, Wyoming.
A September rate cut, coming less than two months before the presidential election, could create unwelcome political pressure for the Fed, which wants to avoid getting embroiled in election-year politics.
Former President Donald Trump has argued that the Fed should not cut rates so close to an election, but Chairman Powell has repeatedly stressed that the Fed will make interest rate decisions based purely on economic data, regardless of political agendas.
Several Democratic senators, led by Massachusetts Sen. Elizabeth Warren, have urged Powell to cut rates at the Fed’s July meeting, arguing that delaying a cut justified by inflation data is itself a political stunt.
Inflation, according to the Fed’s preferred measure, is now just 2.5% from a peak of 7.1% in 2022. Two Fed officials Slower inflation would push up the inflation-adjusted interest rates that businesses monitor, they said. Both Atlanta Fed President Raphael Bostic and Chicago Fed President Austen Goolsbee have said that trend supports near-term rate cuts.
“We may need to shift our policy stance sooner than we previously thought,” Bostic said.
Many analysts expect Powell’s speech on Friday to signal the Fed’s confidence that inflation will return to its 2% target, and it may also offer some hints about how many rate cuts there might be this year. In a press conference after the Fed’s meeting last month, Powell suggested a wide range of policy changes were possible, “from zero to several rate cuts” by the end of the year.
Two days after the Fed met late last month, the government released the July jobs report. Hiring was much weaker than expected and the unemployment rate rose for a fourth straight month to a still-low 4.3%. The weak jobs report sent the stock market plummeting for two days, and traders suddenly worried that a recession might be on the way.
But last week, the government announced that sales at retail stores and restaurants Rising at a healthy pace July provided evidence that consumers are still willing to spend, helping to spur the economy, and a separate report showed the number of people applying for unemployment benefits, a proxy for layoffs, fell last week, a sign most businesses are still keeping workers on the payroll.
