Fed minutes: A rate cut will likely happen in next month

Meeting minutes released Wednesday showed that Fed officials at their July meeting moved closer to a long-awaited interest rate cut, while signaling that a September cut was increasingly likely.

According to CNBC, the summary said that the “vast majority” of participants at the July 30-31 meeting “noted that if data continue to perform as expected, it would likely be appropriate to ease policy at the next meeting.”

While all voters on the interest-rate-setting Federal Open Market Committee voted to hold rates steady, there was a tendency among an unspecified number of officials to begin easing at the July meeting rather than wait until September.

Markets are fully pricing in a September cut, which would be the first since emergency easing in the early days of the Covid crisis.

Meanwhile, Federal Reserve Chairman Jerome Powell is expected to begin the next chapter in his fight against inflation on Friday, setting the stage for interest rate cuts while offering investors reassurances that policymakers can avoid a sharp economic slowdown.

The highly anticipated speech at the Fed’s annual meeting in Jackson Hole, Wyoming, comes at a crucial time for the U.S. central bank and the $27 trillion Treasury market.

Powell and his colleagues are moving toward lowering borrowing costs seven weeks before the presidential election, a delicate task that will put them under intense scrutiny.

It also comes as officials increasingly focus on the slowing labor market after years of focusing too much on price pressures.