Minutes Show U.S. Fed Not Ready To Cut Interest Rates

The latest meeting minutes from the U.S. Federal Reserve show that the central bank is not ready to lower interest rates.

Minutes released from the Fed’s June meeting show that central bank officials feel inflation is moving in the right direction but that they are not yet confident in easing monetary policy.

The meeting’s summary states: “Participants affirmed that additional favorable data were required to give them greater confidence that inflation was moving sustainably toward two percent.”

While there was some debate and disagreement over the direction of interest rates, the June meeting concluded with the central bank holding its benchmark Fed Funds rate at its current range of 5.25% to 5.50%, the same level it has been at for a year.

The U.S. Federal Reserve targets a 2% annual inflation rate, a level it has been above since early 2021.

The latest reading showed that inflation in the U.S. was at an annualized 2.6% in May of this year. That’s down from a peak of 9.1% in June 2022.

Futures traders continue to bet that the Fed will lower interest rates by 25-basis points at its policy meeting this September, and that there will be a total of two rate cuts by year’s end.

At a conference in Portugal on July 2, Fed Chair Jerome Powell said the risks of lowering interest rates too soon and causing a resurgence of inflation versus cutting too late and hurting the economy have come more into balance in recent months.

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