FOMC minutes: Couple of policymakers preferred 50 bp rate cut in July

FOMC minutes showed couple of participants preferred a 50 bp rate cut.
Policymakers who favored rate cut pointed to decelerating economy.
Following the initial reaction, US Dollar Index returned to comfort zone.

According to the minutes from the Federal Reserve’s July 30-31 monetary policy meeting, a couple of Fed policymakers voiced their preference to make a 50 basis point rate rate cut in July rather than a 25 basis point cut to address the low inflation.

"Most policymakers viewed a 25 basis point cut as part of a recalibration of policy stance, or mid-cycle adjustment, in response to recent changes in economic outlook," the statement further read.

With the initial market reaction, the US Dollar Index spiked to a daily high of 98.22 but quickly returned to 98.15 area. Below are some other key takeaways as reported by Reuters.

"Several policymakers favored maintaining the same target range at July meeting."

"Policymakers generally favored an approach that avoided any appearance of the Fed being on a preset course."

"Policymakers who favored rate cut pointed to decelerating economy, elevated risks including the global economic outlook, international trade and US inflation outlook."

"A few policymakers expressed concern over the persistent inversion of 3-month/10-year yield curve."

"Policymakers discussed monetary framework, agreed current framework has served central bank well."

"In framework discussion, a number of policymakers said Fed could have been more aggressive with quantitative easing."

"In framework discussion, participants said forward guidance and quantitative easing may not be enough to eliminate risk of protracted periods in which zero lower bound hinders policy."

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