Breaking: FOMC officials acknowledged inflation remained elevated
The Federal Open Market Committee (FOMC) published the Minutes of the July meeting on Wednesday. "The information available at the time of the meeting indicated that inflation remained elevated. Labor market conditions remained stable, and real gross domestic product (GDP) continued to expand," the document reads.
The document also showed that, despite most participants supporting keeping interest rates unchanged, several favored a hike. Many participants judged higher rates would likely be necessary if inflation fails to decline, while a few opted out for an immediate hike, saying it could avoid the need for further increases later.
Fed officials noted that price increases over the past year were broad-based across services and goods, while the Fed Staff Economic Outlook showed the inflation outlook was similar to one prepared for the June meeting, but the economic outlook was a touch weaker.
Participants generally expected solid real GDP growth to continue in the near term and pointed to a few factors likely to support continued expansion, including ongoing AI-related investment and household spending. Participants acknowledged that, while the economy had demonstrated resilience to date, uncertainty surrounding the economic outlook remained elevated, partly due to the conflict in the Middle East.
Other than that, various participants noted that their overall assessments of the economy were little changed given the short interval between the June and July meetings. Chairman Kevin Warsh observed that six scheduled meetings per year, held roughly every two months, would allow more information to accumulate between meetings than under current practice and provide policymakers and the staff more time to consider strategic monetary policy issues. Still, no decision was made, and the 2026 schedule remains unchanged.
Market reaction
The US Dollar remains under selling pressure following the announcement, weighed by an early announcement from the United States (US) Treasury Department that it will increase the size of government debt repurchases by at least double. The US Dollar Index (DXY) trades around the 98.90 level after the FOMC Minutes.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.80% | -0.49% | -0.74% | -0.61% | -0.45% | -0.94% | -1.66% | |
| EUR | 0.80% | 0.30% | 0.04% | 0.21% | 0.34% | -0.17% | -0.87% | |
| GBP | 0.49% | -0.30% | -0.24% | -0.10% | 0.06% | -0.46% | -1.18% | |
| JPY | 0.74% | -0.04% | 0.24% | 0.16% | 0.29% | -0.21% | -0.93% | |
| CAD | 0.61% | -0.21% | 0.10% | -0.16% | 0.14% | -0.37% | -1.09% | |
| AUD | 0.45% | -0.34% | -0.06% | -0.29% | -0.14% | -0.49% | -1.20% | |
| NZD | 0.94% | 0.17% | 0.46% | 0.21% | 0.37% | 0.49% | -0.71% | |
| CHF | 1.66% | 0.87% | 1.18% | 0.93% | 1.09% | 1.20% | 0.71% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the FOMC Minutes of the July meeting at 17:15 GMT.
- The Fed Minutes are expected to reveal the extent of support for higher interest rates after three dissenting votes in July.
- Softer inflation and labor market data since the meeting support the case for keeping rates unchanged in September.
- Markets currently see a 34% chance of a September rate hike, down from around 60% three weeks ago.
The United States (US) Federal Reserve (Fed) will release the Minutes of the July Federal Open Market Committee (FOMC) meeting on Wednesday. The document should allow investors to assess the extent of the hawkish bias within the central bank after a meeting marked by three dissenting votes in favor of a rate hike.
The Fed left the Fed Funds rate unchanged in the 3.5%-3.75% range in July, as widely expected. However, three officials, regional Fed Presidents Lorie Logan, Beth Hammack and Neel Kashkari, voted for a 25-basis-point (bps) rate increase, highlighting growing divergences within the Committee.
The monetary policy statement was broadly unchanged from June and provided no explicit guidance about future decisions. This limited communication is consistent with Fed Chair Kevin Warsh's preference for reducing forward guidance and preserving greater flexibility from one meeting to the next.
The Minutes will therefore be closely scrutinized to determine whether the hawkish bias extended beyond the three dissenters. Signs that other officials considered a rate increase before ultimately voting for a hold could keep the possibility of monetary tightening in September alive.
Fed hawks face a changing economic picture
Attention will focus particularly on the arguments made in favor of higher interest rates. At the July meeting, economic activity continued to expand at a solid pace, supported by strong productivity and investment, while inflation remained above the Fed's 2% target.
The more hawkish officials may have argued that supply shocks and the boom in Artificial Intelligence-related investment risk sustaining inflationary pressures. The relative stability of the labor market also provided an argument for the central bank to prioritize returning inflation to its target.
However, the macroeconomic backdrop has changed significantly since the meeting. July Consumer Price Index (CPI) and Producer Price Index (PPI) data showed moderating inflationary pressures. At the same time, the latest employment report signaled a more pronounced deterioration in the labor market, with an unexpected decline of 23K jobs in July and significant downward revisions to previous months.
These data have strengthened the case for patience. Wells Fargo economists expect the Minutes to show that most Committee members remain willing to wait for further progress on inflation, while arguing that the bar for future rate hikes remains relatively low if price pressures fail to ease further.
This shift also explains why investors might attach less importance than usual to Wednesday's document. The Minutes reflect a debate that took place before the latest employment and inflation data were released and could therefore portray a more hawkish stance than the Fed's current position.
Markets could consequently turn their attention quickly to the Jackson Hole Economic Symposium, where Kevin Warsh is expected to speak later this month. The Fed will also receive another round of inflation and employment data before its September meeting, leaving the interest rate outlook largely dependent on incoming economic data.
When will FOMC Minutes be released and how could they affect the US Dollar?
The FOMC will release the Minutes of its July 28-29 policy meeting on Wednesday at 18:00 GMT.
Expectations of higher interest rates have declined significantly since the July meeting. According to the CME FedWatch tool, markets now see a 34% chance of a 25 bps rate hike in September, down from around 60% three weeks ago, while keeping rates unchanged has become the clear base case.
Against this backdrop, the key question for the US Dollar (USD) will be whether the three dissenting votes reflect a broader hawkish current within the Committee.
If the Minutes show that several officials who voted to keep rates unchanged nevertheless believed that further monetary tightening could soon become necessary, expectations of a September hike could rebound. Such a scenario could support US Treasury yields and the US Dollar.
Conversely, if the document shows that most FOMC members view the current level of interest rates as sufficiently restrictive and prefer to wait for more data before considering another hike, expectations of a September hold could strengthen and weigh on the US Dollar.
The market reaction could nevertheless remain limited. The Minutes are backward-looking, and data released since the meeting have already altered the economic landscape. Investors may therefore focus more closely on upcoming US economic releases and Kevin Warsh's comments at Jackson Hole to reassess the monetary policy outlook ahead of the September meeting.
In the four-hour chart, the US Dollar Index (DXY) trades at 99.46, maintaining a bearish near-term tone as it holds below the 100-period simple moving average (SMA) at 100.03 and the 200-period SMA at 100.51. The downward resistance trendline, now coming in around 99.89, reinforces the topside cap, while the Relative Strength Index (RSI) near 38 hints at lingering downside pressure rather than a decisive oversold rebound.
On the topside, initial resistance is seen at the trendline area around 99.89, ahead of the 100-period SMA at 100.03. Further up, a horizontal barrier around 100.35 stands before the longer-term 200-period SMA near 100.51. On the downside, the next significant support is the horizontal floor at 98.90, where buyers could attempt to slow the current decline if selling extends.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Economic Indicator
Nonfarm Payrolls
The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.
Read more.Last release: Fri Aug 07, 2026 12:30
Frequency: Monthly
Actual: -23K
Consensus: 80K
Previous: 57K
Source: US Bureau of Labor Statistics
America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.
Author
FXStreet Team
FXStreet
Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.
