The minutes from the Federal Open Market Committee (FOMC) meeting held from November 12th to [date] were officially released a few minutes ago. The Federal Reserve is awaiting more information before making a decision on interest rate cuts. However, signs of inflation progress can be seen from certain indicators.
The minutes did not reveal any unknown new content, except for the Fed’s expectation that the country’s unemployment rate may increase if demand weakens. Despite a significant drop in the inflation rate from the peak of 9.1% in June 2022 to 2% in March 2024, inflation remains a concern for the Fed. Over the past six to eight months, the average Consumer Price Index (CPI) has been around 23%. The Fed has explicitly stated that it will not consider cutting interest rates until the CPI reaches 2%, and the federal funds rate has remained at its peak since [month] 2022.
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Goldman Sachs warns that market adjustments may be inevitable. On Wednesday, US stock indices rose during the shortened trading session due to the holiday, as weak economic data boosted hopes for the Fed to start easing policies in September.
The ADP employment report and weekly data on unemployment benefits claims indicate a relaxation in the labor market conditions, a welcome sign ahead of the closely-watched non-farm employment report on Friday. The market hopes that signs of a weakening labor market will increase the chances of the Fed cutting interest rates.
According to LSEG’s FedWatch report, today’s data prompted market participants to increase their bets on a rate cut in July to over 70%.
The minutes from last month’s FOMC meeting displayed the Fed’s hawkish stance to global investors. In March 2024, the annual US inflation rate dropped to 3.4%, below the 0.2% of February. Compared to the previous month, the Consumer Price Index (CPI) remained steady. Meanwhile, the core inflation annual growth rate slowed to 0.3%, and the core inflation monthly rate dropped from 0.3% to [number], also better than the predicted [number].
Federal Reserve Chairman Powell recently spoke at the European Central Bank forum held in Sintra, Portugal. Michael Brown, a senior research strategist at Pepperstone, noted that the US economy is moving in the right direction towards the 2% inflation target.
