The July cut was taken into account, while the cut in September is more appropriate – UOB Group

While FOMC members ultimately voted to remain in recess for the 8th straight time in July, the July FOMC minutes indicated that participants felt that the data they received increased their confidence that inflation is heading towards the objective of the Committee, the senior economist of the UOB group Alvin. Notes Liew.

The Fed is considering cutting rates in September

“The key takeaway from the US Federal Reserve’s (Fed) minutes of its July 30/31, 2024 Federal Open Market Committee (FOMC) meeting was that while several participants saw it as plausible to cut interest rates in July , all participants eventually agreed to hold rates. Importantly, the minutes noted that the “large majority” thought it would be appropriate to cut rates at the September meeting.”

“The minutes indicated that risks to inflation and unemployment are in better balance, while some see the labor market at risk of more severe deterioration. Almost all FOMC participants expect US disinflation progress to continue. Separately, the BLS released its annual benchmark revision of payrolls, which cut job gains by 818,000 between April 2023 and March 2024, the largest revision since 2009. However, if we consider other key data, the current situation is totally different from (better than ) 2009, despite revisions of similar size.”

“After holding FFTR steady at 5.25-5.50% in the July FOMC, we continue to believe that the Fed will subsequently begin to ease monetary policy at the end of Q3, where we consider 50 bps rate cuts for the rest of the year 2024. We remain reluctant to call for a rate cut of more than 50 basis points in September as general economic and labor market data still point to a soft landing for the US and aggressive easing is not necessary at this time.”