The minutes of the FOMC confirmed that the majority was leaning towards a reduction in September

The minutes of the July 30-31 FOMC meeting indicated that the “vast majority” of members believed it “probably would be appropriate to ease policy at the next meeting.”

Although policymakers agreed to keep interest rates unchanged then, the minutes also showed that some officials were inclined to start cutting in July rather than wait until September.

“All participants supported keeping the target range for the federal funds rate at 5¼ to 5½ percent, although several noted that recent developments in inflation and increases in the unemployment rate provided a plausible case for reducing the target range by 25 basis points to this meeting. or that he could have supported such a decision.”

Link to FOMC meeting minutes (July 30-31)

In addition, committee members noted that recent data increased their confidence that inflation is moving sustainably toward the 2% target, but cautioned that “A further gradual easing of labor market conditions could turn into a more serious deterioration.”

Market reactions

US Dollar vs. Major Currencies: 5 min

USD chart overlay against major currencies by TradingView

The US dollar, which had already fallen in the hours before the release of the FOMC minutes due to annual revisions to the NFP, suffered a sharper decline across the board on further confirmation of a likely September rate cut.

USD/JPY recorded the steepest drop as bearish momentum was already in play since the pair retreated from the 146.00 handle in the previous trading session. Still, the dollar rallied after the post-FOMC minute dip as traders likely took profits when the report was largely in line with expectations.