The key takeaway from the US Federal Reserve’s (Fed) minutes of its 11/12 Jun 2024 Federal Open Market Committee (FOMC) meeting, was the Fed policymakers’ concern over the slower progress on inflation than what they had expected last Dec (2023), UOB Groups Senior Economist Alvin Liew notes.
Fed policymakers seek signs of easing inflation
“While the minutes of the Jun FOMC indicated that the Fed policymakers ‘emphasized the importance of conditioning future policy decisions on incoming data, the evolving economic outlook, and the balance of risks’, they were less aligned with the timing/extent of holding policy unchanged.”
“Notably, ‘some’ policymakers emphasized the need for patience, while ‘several’ warned that that rates may need to be raised ‘were inflation to persist at an elevated level or to increase further’. And ‘several’ pointed to concerns about the labour market as they warned that ‘a further weakening of demand may now generate a larger unemployment response.”
“Indeed, while the median number of rate cuts expected by the FOMC members have been reduced from three to just one (in the Jun Dotplot), the minutes showed increasing concern among the policymakers on growth and potentially weaker labour outcomes.”
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