Fed officials split on how many rate cuts this year

Four members expected no cuts, and eight members expected two cuts. According to the Fed minutes, a rate move is not yet justified.

Fed members have different expectations for the number of rate cuts this year. Four representatives do not expect to take any action, according to minutes of the last meeting released on Wednesday. Fedsession. However, twice as many people expected two cuts. The expected mean was one. There will be four cuts in the coming year. This is more than the previous estimate.

The publication did not cause any volatility in the foreign exchange market. Due to the upcoming holiday in the United States, the US stock and bond markets were closed at the time of the announcement.

Interest rate adjustment is not reasonable

The minutes of the June meeting also showed that the Fed believes that despite the progress made in fighting inflation, its tight monetary policy stance is still justified. According to this, the monetary authorities said that price pressures are easing and the economy has clearly cooled. However, they do not see the time to cut interest rates yet. For this, they want to see more data to give them more confidence that inflation is moving sustainably towards the central bank’s 2% target.

According to the minutes of the June 11-12 meeting, a shift in interest rates was not justified as conditions had improved only slightly so far, despite signs of slowing economic growth and easing price pressures.

Interest rate reversal likely in September

Like the chairman of the Federal Reserve Jerome Powell exist European Central BankThe Sintra Forum said progress had been made in fighting inflation, but the central bank was in no hurry to cut interest rates. The Fed fights inflation with a high interest rate policy. It is also trying to cool the labor market.

The monetary authority kept the benchmark interest rate in the range of 5.25% to 5.50% in June. Financial markets speculate that the central bank will not affect the key interest rate at the end of July, but will dare to cut it in September. Recent economic data supports the hypothesis of a cooling of the US economy. From the perspective of stock market investors, this makes it more likely that the Fed will cut interest rates in September. (APA/dpa-AFX/Reuters)