The Federal Reserve (FED) has just released the detailed minutes from its June meeting, where it decided to maintain interest rates at their current level. Here are the key points from the meeting:
– The FED is awaiting “additional information” before making any decisions regarding interest rate cuts.
– Some workers expressed concerns that unemployment may increase if demand weakens.
– The majority of participants in the meeting acknowledged that economic growth in the USA is gradually slowing down.
– Most participants viewed the current policy stance as restrictive.
– If inflation remains high or continues to rise, there may be a need to increase interest rates, according to some participants.
– There was a specific emphasis on the potential for a greater increase in unemployment if demand weakens further.
– Participants agreed that policy should be ready to respond to unexpected economic weakness.
– The May Consumer Price Index (CPI) data was seen as evidence of progress towards the inflation target.
– Some participants noted modest progress towards the Committee’s 2% inflation target in recent months.
– It was also highlighted that unemployment may increase if demand weakens.
Federal Reserve Chairman, Jerome Powell, reiterated the need for more data before considering any changes to monetary policy. This comes as inflation rates have fallen from 2.8% in April to 2.6% in May, the lowest in over three years. Powell wants to ascertain whether these levels of inflation accurately reflect underlying inflation, and stressed that the Fed can afford to be patient given the strong job market. Investors reacted positively to these comments, with the probability of a rate cut in September priced at around 60%.
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