Most Fed officials see tax cuts coming


Fed Officials posted a split between their willingness to lower interest rates, concerns over tariff inflation and signs of weak labor markets and economic strength in the June meeting.

From minutes released on Wednesday, released at the meeting, held from June 17 to 18, policymakers are largely waiting for future interest rates. The meeting was voted unanimously by the Federal Open Market Committee members to keep the central bank’s main lending rate between 4.25% and 4.5%, which has been in place since December 2024.

However, the summary also shows how the policy should be carried out from here.

“Most participants’ target range for evaluating federal funding rates this year may be lowered,” the minutes said.

However, the cut distance can be a question of debate.

Opinions range from “couples” officials say the next cut this month may be as soon as possible to “some” believe that no reduction this year is appropriate. Although the minutes did not mention the name, Fed Gov. Michelle Bowman and Christopher Waller have recorded it on the record saying that if inflation remains in control, they can see ways to lower rates at the Fed’s meeting from July 29 to 30.

Meanwhile, “several” officials said they believe the current overnight funding rate is “probably not far from neutral levels”, meaning only a few cuts may be ahead. In the “resilient” economy, these officials pointed out that inflation remains above the 2% target.

There are more than a few of the Fed’s statements.

Officials at the meeting updated their forecasts for a downgrade, with three more games expected to be added in the next few years this year.

The release is President Donald Trump raising pressure on aggressive cuts to Fed Chairman Jerome Powell and his associates. On public statements and his truth social networking site, Trump slams Powell for desperate need to resign.

Powell repeatedly said that he would not succumb to political pressure when it comes to monetary policy formation. In most cases, he added a cautious approach, insisting that the Fed is in a good position to stay on hold until more information is obtained in terms of strong economy and uncertainty about inflation.

The minutes largely reflect the policy’s current position of responding to data changes.

“Participants agreed that despite the reduction in uncertainty about inflation and economic outlook, it is still appropriate to take a careful approach to adjusting monetary policy,” the document said.

Officials also noted that they “will face a difficult trade-off if inflation increases and the employment outlook weakens.” In this case, they say they will weigh which goals and what they are in setting policy goals.

Trump has been negotiating with major U.S. trading partners since the meeting, and the tariff ground is shifting almost every day. Trump initially announced tariffs on April 2, then changed the deadline for the deal, and recently sent a series of letters to foreign leaders informing them that they would be imminent if they don’t take action.

Recent data suggests that Trump’s tariffs have not reached prices, at least on a large scale.

The increase in the Consumer Price Index in May increased by only 0.1%. Although inflation gauges are still above the Fed’s 2% target, recent sentiment surveys show that public fears about inflation are becoming less and less fearful.

“Many participants pointed out that the ultimate impact of tariffs on inflation could be more limited if a trade deal is reached soon, if a company can adjust its supply chain quickly, or if the company can use other adjustment ranges to reduce the impact on tariffs.”

Meanwhile, while the pace of non-agricultural wage growth surprised economists, job gains slowed significantly. The consensus forecast for June rose 147,000 to 110,000, while the unemployment rate unexpectedly dropped to 4.1%.

Consumer spending has slowed significantly. Personal spending fell 0.1% in May, while retail sales fell 0.9%.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *