There Federal Reservein the last meeting held at the end of July, confirmed that will cut interest rates in September, after having postponed this decision again in the last meeting at the end of July. This is what emerged from the minutes of the last FOMC meetingthe Federal Reserve’s Monetary Policy Committee, released yesterday evening, which confirmed the bankers’ inclination to start a path of reducing the cost of money.
Majority in favor of a cut
“The vast majority” of the bankers – the Minutes reveal – has judged “appropriate” proceed with a rate cut at next meeting of September.
“In discussing the prospects for monetary policy – it says – the participants noted that the growth of economic activity was solidthat further events have occurred progress on inflation and that the conditions in the job market have loosened”, therefore “the overwhelming majority He noted that if data continues to come in as expected, it would likely be it is appropriate to loosen monetary policy in the next meeting“.
The approach related to incoming data is useful
The Fed bankers then “stressed the importance of confirm the data-dependent approach of the Committee” and reiterated that “monetary policy decisions are conditioned by the evolution of the economy rather than following a pre-established path”.
“The members (of the Fed) agreed that, in evaluate the appropriate orientation of monetary policy, will continue to monitor the implications of incoming information on the economic outlook” and they say “ready to adapt appropriately‘orientation of monetary policy should they emerge risks which could prevent the achievement of the objectives” and for this reason “will take into account a wide range of information, including readings on the conditions of the job marketon the inflationary pressures and on inflation expectations, as well as on financial and international developments“.
“The Committee believes that the risks to the achievement of its objectives employment and inflation targets – the Minutes conclude – continue to move towards a better balance” and that the Fed is “risk-aware” for both goals of its dual mandate.
Waiting for Powell’s speech
The spotlight is now on the Jackson Hole symposiumwhich starts today, August 22, and ends on Friday, August 24. The traditional meeting of central bankers, hosted in Wyoming by the Kansas City Fed, will reach its climax on Friday afternoon at 4:00 p.m., when the President Powell’s speech.
If a rate cut in September is now almost a given, market participants will seek to have confirmations on the possibility of further cuts within the yearwhile the front of those betting on is strengthening three consecutive cuts this fall. An expectation also supported by the weak labor market data: The U.S. Department of Labor has significantly revised downwards (-818 thousand units) the employment numbers for the last 12 months to March 2024, confirming concerns of an excessive weakening of the labor market.
