The FOMC minutes, which contain the details of the Fed’s last interest rate meeting, have finally been published.
Here are the highlights from the meeting minutes:
- Many officials said it could take time for the full impact of the tariffs to be seen.
- Some members are concerned about high asset values.
- The majority believe that the risk of inflation outweighs the risk of employment.
- Several participants noted that the current target range for the federal funds rate may not be too far from neutral.
- The authorities’ real GDP forecasts for 2025-2027 were similar to those prepared for the June meeting.
- Almost all attendees at the Fed’s July meeting agreed that keeping the benchmark interest rate between 4.25% and 4.50% would be appropriate.
- Participants assessed that the impact of customs duties on commodity prices has become more pronounced, but their overall impact on the economy and inflation is not yet clear.
- Some participants stated that it would be more appropriate and possible to adjust monetary policy rather than waiting for the full impact of tariffs on inflation to become clear.
- Most officials believe Fed policy is in an appropriate position.
- Participants also noted that it will take time to more clearly understand the magnitude and persistence of the impact of higher tariffs on inflation.
- Participants who opposed leaving interest rates unchanged thought that inflation was unlikely to be sustainable and expressed concern about employment risks.
- Some participants said that if we leave aside tariff factors, inflation levels would be close to target.
- Authorities are closely monitoring the growth of stablecoins and the risks associated with them after the passage of the Genius Act.
- Many officials predict that economic growth will slow in the second half of the year.
The Bitcoin price reacted as follows after the document was released:
At the FED’s Federal Open Market Committee (FOMC) meeting held on July 29-30, a decision was made to keep interest rates constant, but two senior officials opposed this decision and requested a rate cut.
Less than 48 hours after the meeting, employment data released confirmed Bowman and Waller’s concerns. Labor Department data showed that job creation in July was well below expectations, the unemployment rate rose, and labor force participation fell to its lowest level since late 2022.
Even more striking was the downward revision of data for May and June, wiping out more than 250,000 jobs. This development severely damaged the narrative of a strong labor market. President Donald Trump, angered by the data, fired the head of the Bureau of Labor Statistics.
Following the minutes, all eyes turn to Fed Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium on Friday. It remains to be seen whether Powell will join those who advocate for interest rate cuts to protect the weakening labor market or align with members concerned about inflation. This will be Powell’s final Jackson Hole speech, as his term expires in May next year.
*This is not investment advice.