Fed Minutes: Rate Cuts On Hold Until Inflation Decline Clearer

James Hyerczyk
Published: Jul 3, 2024, 18:30 GMT+00:00

Key Points:

  • FOMC holds rates at 5.25%-5.50%, needing more data to confirm inflation is sustainably moving toward 2%.
  • Despite strong job gains, Fed participants caution on potential economic weaknesses that may need policy adjustments.
  • Fed remains vigilant on inflation risks, prepared to adjust policy based on incoming data and economic outlook.
  • May's CPI reading shows progress towards inflation goals, but more evidence is needed before rate cuts.
  • Economic indicators suggest gradual cooling of growth, with the labor market still robust but potential weaknesses ahead.
FOMC Minutes

Inflation and Interest Rates

The FOMC participants acknowledged that while inflation is moving in the right direction, it is not decreasing quickly enough to warrant a cut in interest rates. They emphasized the need for additional favorable data to gain confidence that inflation is sustainably moving toward the Fed’s 2% target. As a result, the committee decided to keep the federal funds rate unchanged at 5.25%-5.50%.

Economic Growth and Labor Market

Most participants observed that U.S. economic growth appears to be gradually cooling, yet remains solid. The labor market continues to be strong, with job gains persisting and the unemployment rate remaining low. However, there is caution regarding potential future economic weakness that might necessitate policy adjustments. Several participants highlighted the risk of a larger unemployment response if demand weakens further.

Inflation Observations

The participants noted modest progress toward the 2% inflation objective in recent months. May’s Consumer Price Index (CPI) reading provided some evidence of this progress. Developments in product and labor markets were seen as supportive of diminishing price pressures. Despite this, participants reiterated that more evidence is needed before considering any reduction in the target range for the federal funds rate.

Risks and Future Policy

Several participants expressed concerns about the persistence of inflation at elevated levels. They indicated that if inflation were to remain high or increase, further rate hikes might be necessary. Conversely, they also stressed the need to be prepared to respond to unexpected economic weaknesses.

The committee remains highly attentive to inflation risks and is committed to adjusting the policy stance based on incoming data, the evolving economic outlook, and the balance of risks. The FOMC aims to maintain its restrictive policy stance to restrain aggregate demand and moderate inflation pressures.


In conclusion, the FOMC is adopting a cautious approach, keeping interest rates steady while monitoring economic indicators closely. They are prepared to take necessary actions to ensure inflation trends towards their 2% goal. The committee’s current policy is shaped by the need for more substantial evidence of inflation reduction and the ongoing assessment of economic conditions.

These minutes provide a clear picture of the Fed’s commitment to managing inflation while balancing the need for economic stability. Traders and analysts should watch for future economic data releases, as these will significantly influence the Fed’s policy decisions going forward.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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