Breaking News: July FOMC Minutes Signal Potential Rate Cut in September, JPMorgan Economists Say
The latest Federal Open Market Committee (FOMC) minutes revealed growing concerns about labor market risks and a dovish stance from the committee, according to JPMorgan economists. The minutes, from the July 30-31 meeting, showed that the committee is more focused on labor market vulnerabilities than on the risk of inflation, despite acknowledging somewhat elevated inflation levels.
While only a few members considered cutting rates by 25 basis points at the last meeting, a majority are leaning towards supporting a rate cut at the upcoming September meeting. Many participants viewed current policy as restrictive, indicating the possibility of a rate cut in the near future.
The committee is closely monitoring the impact of rising unemployment, with some anticipating downward revisions to payroll numbers. The decision on whether to cut rates by 25 or 50 basis points in September will depend heavily on the upcoming monthly employment report.
Citi economists also believe that a rate cut is imminent in September, citing softer CPI inflation data and weaker employment numbers as factors supporting their prediction. The August employment data will play a key role in determining the size of the rate cut.
Following a weaker-than-expected July jobs report, a significant downward adjustment to recent payroll growth was revealed. This adjustment implies a lower monthly job growth rate than previously reported.
In conclusion, the July FOMC minutes suggest that a rate cut is likely in September, with the size of the cut depending on upcoming economic data. Investors should monitor the employment reports closely for insights into the Federal Reserve's future monetary policy decisions.