WASHINGTON: The Federal Reserve (Fed) appears to be very much on track for an interest rate cut in September after a "vast majority" of officials said such an action was likely, according to the minutes of the US central bank's Jul 30 to Jul 31 meeting.
WASHINGTON: The Federal Reserve appears to be very much on track for an interest rate cut in September after a"vast majority" of officials said such an action was likely, according to the minutes of the US central bank's Jul 30 to Jul 31 meeting.
They also noted that"many" Fed officials viewed the stance of rates to be restrictive and"a few participants" contended that amid an ongoing cooling in inflationary pressures, no change in rates would mean that monetary policy would increase the drag on economic activity. Jamie Cox, managing partner at Harris Financial Group, said"the Fed minutes removed all doubt about a September rate cut". He added that"the Fed's communication strategy is to make its meetings less of a market-moving event, and they are following the script to the letter"., central bank watchers are already contemplating the future scope of cuts and whether aggressive action is needed at the onset of the easing cycle.
The minutes noted that officials see the job market as having largely returned to where it was before the COVID-19 pandemic started, and described the job market as"strong but not overheated".Markets showed little reaction to the release of the minutes, with stocks rising modestly to end the day higher and bond yields falling.
The minutes also noted that a"majority" of Fed officials saw risks to the job market as having increased while risks to the inflation mandate had been reduced.
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