The minutes of the Federal Open Market Committee (FOMC) meeting on June 11-12 were officially published a few minutes ago.
The Federal Reserve is awaiting additional information to make a decision on interest rate cuts. However, progress in inflation is also evident from a series of indicators.
The minutes of the Fed meeting do not reveal anything new that is not already known, except that the US central bank also expects a potential increase in unemployment in the country if demand weakens.
Despite a significant decline from a peak of 9.1% in June 2022 to 3.4% in May 2024, inflation continues to concern 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 rate cuts 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 indexes rose on Wednesday during the shortened holiday trading session as data indicating a weakening economy increased hopes for the start of Federal Reserve policy easing in September.
Both the ADP employment report and weekly initial jobless claims data indicated easing labor market conditions, which is a welcome sign ahead of the closely watched nonfarm payrolls report on Friday. Markets are hoping that signs of weakness in the labor market will increase the chances of the Fed lowering interest rates.
Today’s data prompted market participants to increase bets on interest rate cuts in September to over 70%, as indicated in the LSEG FedWatch report.
The minutes of the FOMC meeting of the Federal Reserve held last month showed global investors the “hawkish” position of the Fed.
In May 2024, the annual inflation rate in the US dropped 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% on an annual basis, and the monthly rate of core inflation decreased to 0.2% from 0.3%, which is also better than the forecast of 0.3%.
Federal Reserve Chairman Jerome Powell recently spoke at the European Central Bank Forum in Sintra, Portugal. Michael Brown, Senior Research Strategist at Pepperstone, stated that the US economy is moving in the right direction towards the 2% inflation target.
