The Federal Reserve’s latest minutes did not include any views supporting rate cuts, signaling a clear shift in policy discussions over the past year. The report says inflation pressure has continued to build, energy transport through the Strait of Hormuz remains restricted, and companies unexpectedly cut jobs in July. As a result, markets now expect the Fed to keep its policy rate unchanged again at the Sept. 15-16 meeting. The minutes also showed that officials remain divided over whether another rate hike may be needed to curb inflation, while growing more cautious about labor market strength and the risks to the full employment mandate. The article adds that the market lacks clear guidance from Fed Chair Waller, who has not discussed the monetary policy path for his term.
The Federal Reserve’s meeting minutes did not mention any views in favor of rate cuts, a sign that policy discussions have shifted markedly over the past year.
At the start of last year, markets were expecting inflation to cool enough for the Fed to lower borrowing costs this year. That view has not played out. Price pressures have kept building, especially after the Trump administration joined Israel’s war against Iran.
Nearly six months after the conflict began, oil and gas flows through the Strait of Hormuz, a key shipping route, are still restricted.
Recent data showed inflation easing slightly, while companies unexpectedly cut jobs in July. On that basis, markets now expect the Fed to leave rates unchanged again at its Sept. 15-16 meeting.
The minutes show officials are still divided over whether another rate hike is needed to further restrain inflation. At the same time, they are taking a more cautious view of labor market strength and the risks surrounding the Fed’s full employment goal.
The market also lacks a clear signal from Fed Chair Waller, who has been unwilling to discuss the monetary policy path for his term.
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