The FOMC minutes, which include details of FOM’s final interest rate meeting, have finally been published.
The highlights of the meeting minutes are as follows:
- Many officials said it could take time for the tariff to be seen to have a complete impact.
- Some members are concerned about the high asset value.
- The majority believe that inflation risk outweighs employment risk.
- Several participants noted that the current target range for federal funding rates may not be too far from neutral.
- The authorities’ actual GDP forecast for 2025-2027 was similar to what they prepared for the June meeting.
- Almost all attendees at the Fed’s July meeting agreed that it would be appropriate to maintain the benchmark interest rate between 4.25% and 4.50%.
- Participants rated the impact of tariffs on commodity prices being more pronounced, but the overall impact on the economy and inflation is not yet clear.
- Some participants said it would be more appropriate and possible to adjust monetary policy than wait for the full impact of tariffs to be revealed on inflation.
- Most officials believe that the Fed’s policies are in the right position.
- Participants also said it would take time to better understand the magnitude and persistence of the impact of increased tariffs on inflation.
- Participants who opposed the interest rate remained were unlikely to be sustainable inflation and did not believe they expressed concern about employment risk.
- Some participants said that if they put the tariff factors aside, inflation levels were closer to the target.
- Authorities are closely monitoring the growth of Stablecoin and the risks after passing the Genius Act.
- Many officials predict that economic growth will slow down in the second half of the year.
After the document was released, the price of Bitcoin responded:
At the Federal Reserve Federal Open Market Committee (FOMC) meeting held on July 29-30, the decision was made to keep interest rates constant, but two senior officials opposed the decision and called for interest rate cuts.
Employment data released within 48 hours of the meeting confirmed concerns from Bowman and Waller. Labor Bureau data showed job creation in July was well below expectations, with unemployment rates rising, and labor participation fell to lowest levels since the second half of 2022.
Even more impressive were downward revisions of data for May and June, which wiped out more than 250,000 jobs. This development seriously damaged the strong labor market narrative. Rising anger at the data, President Donald Trump fired Director of Labor Statistics.
Following the minutes, all eyes at the Jackson Hole Economic Symposium on Friday turn to Chairman Jerome Powell’s speech. It remains to be seen whether Powell will join people defending interest rate cuts to protect the weakening of the labour market or work with members interested in inflation. This will be Powell’s final Jackson Hole speech as his term expires in May next year.
*This is not investment advice.
