The minutes containing the details of the FED’s interest rate decision meeting in June were shared with the public.
Here are all the details from the FED minutes:
- All participants thought it appropriate to keep the federal funds rate within its current target range.
- Several participants noted that the current federal funds rate may not be significantly above the neutral interest rate.
- Fed staff expect real GDP growth in 2025 to be higher than previous estimates and inflation to be lower than previous projections.
- Participants assessed that uncertainty in the economic outlook has decreased as a result of the announced and expected customs duty reductions, but overall uncertainty remains high.
- Many officials believe that tariffs could lead to persistent inflation risks.
- Most participants thought the federal funds rate should be lowered appropriately this year.
- Several participants indicated they might consider a rate cut at the July meeting if data develops as expected.
- Participants agreed that the risks of rising inflation and weakening the labor market have diminished but remain elevated.
- Some participants said that the most appropriate path would be to not cut interest rates in 2025.
The fact that Fed members Christopher Waller and Michelle Bowman, Vice Chair of Supervision, suggested that a rate cut might be considered at the July meeting was particularly noteworthy. Both were appointed during President Donald Trump’s first term.
At its June meeting, the Fed held its policy rate steady at 4.25%-4.50%. However, the minutes were released retroactively because they came after the meeting three weeks earlier. This means they predate both the release of the strong June jobs report and Trump’s threat to impose new 25% tariffs on major trading partners like Japan and South Korea starting August 1st.
While Trump’s calls for the central bank to cut interest rates continue, market data, including both inflationary pressures and slowing employment growth, present the Fed with a dilemma. The Fed is trying to maintain its 2% inflation target while simultaneously pursuing its mission to keep unemployment low.
*This is not investment advice.