The minutes of the Federal Open Market Committee (FOMC) meeting from June 11-12 were officially published just minutes ago.
The Federal Reserve is waiting for additional information to make the decision on lowering interest rates. However, the progress of inflation is also evident from a number of indicators.
The Fed meeting minutes reveal nothing new that isn’t already known, except that the US central bank also expects a potential increase in unemployment in the country if demand weakens.
Despite the significant decrease from the peak value of 9.1% in June 2022 to 3.4% in May 2024, inflation continues to be a concern for the Federal Reserve. Over the past six to eight months, the average consumer price index (CPI) has been around 3.2%. The Fed clarified that it will not consider lowering rates until the CPI reaches 2%, and the federal funds rate remains at a 23-year high since July 2022.
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Goldman Sachs warns that a market correction may be inevitable
US stock indices rose on Wednesday during the holiday-shortened trading session, as data pointing to economic weakening increased hopes for the start of Federal Reserve policy easing in September.
Like
the ADP employment report
, the weekly data on
jobless claims
indicated easing labor market conditions, which is a welcome signal ahead of the closely watched nonfarm payrolls report on Friday. Markets are hoping that signs of labor market weakness will increase the Fed’s chances of lowering interest rates.
Today’s data prompted market participants to increase bets on a rate cut in September to over 70%, as noted in LSEG’s FedWatch report.
The minutes of the Federal Reserve’s FOMC meeting held last month showed global investors the Fed’s “hawkish” stance.
In May 2024, the annual US inflation rate fell to 3.3%, marking a decrease from 3.4% in April. Compared to the previous month, the consumer price index (CPI) remained unchanged. Meanwhile, core inflation slowed to 3.4% year-on-year, and the monthly core inflation rate dropped to 0.2% from 0.3%, which is also better than the forecasts for 0.3%
Fed Chair Jerome Powell recently spoke at the European Central Bank forum in Sintra, Portugal. Michael Brown, senior research strategist at Pepperstone, clarified that
the American economy is moving in the right direction
towards the 2% inflation target.
