Fed Rate Cuts May Not Happen in July, Markets Await Policy Meeting Minutes Release

Federal Reserve officials had a meeting on June 17-18 during which some of them expressed a fall in interest rates in July. However, a lot of policymakers are still worried about the inflationary pressures that might emerge from US President Donald Trumps import tariff decisions aimed at changing global trade, as noted in the Federal Open Market Committee (FOMC) Minutes.

The minutes released on Wednesday pointed out that most participants felt that rate cuts would be appropriate later this year, acknowledging that price shock from tariffs will likely be temporary or modest.

Here are the Federal Reserve Participant Quotes

The meeting minutes showed agreement among most participants at the Federal Reserve Meeting between 17-18 June saw Fed funds rate reduction appropriate this year.

A few participants expressed their willingness to consider a rate cut as soon as the July meeting provided the changes in data as per their expectations.

Some participants noted that having no rate cuts in 2025 is the most suitable path amid elevated inflation readings, increased business and consumer inflation anticipations, and existing economic resilience.

Several participants anticipated the fed funds rate to be way more than its neutral rate.

All participants, however, agreed on maintaining the Fed funds rate at the existing target range.

Although participants agreed that higher inflation and weaker labour market condition risks had subsided but still remained at elevated levels.

At the same time, participants felt that the uncertainty concerning the economic outlook is diminished with the reduction in expected and announced tariffs. However, overall, uncertainty continues to remain high.

Fed staff foresees increased GDP growth for 2025 compared to the previous forecast and estimated inflation to remain lower than the earlier projection.

How Did the Market React to the FOMC Minutes Release?

The FOMC Minutes release did not impact US Dollar much as it hovered around 97.50 with marginal gains and investors‘ caution following President Trump’s intent of imposing further tariffs.

At 18:00 GMT on Wednesday, the Federal Reserve Monetary Policy meeting minutes will be published. US policymakers decided to maintain the policy rate within the 4,25%-4.50% range. However, they were estimating two 25 basis-point rate cuts in 2025 as found on the revised Summary of Projections (SEP). Investors will scrutinize the discussions that led to holding the rates for now.

Fed Monetary Policy Meeting Chaired by Jerome Powell Decides to Maintain Status Quo on Interest Rates

The FOMC meeting in June, chaired by Jerome Powell, decided to maintain the status quo on interest rates. The policy statement issued saw the US central bank reiterating on the elevated inflation and solid labour market conditions marked by a low employment rate. The SEP demonstrated that despite seeing a 50 basis point policy rate cut in 2025, policymakers forecast just a 25 basis point cut in 2026 as opposed to the 50 bps cut estimates in Marchs SEP.

The post-meeting press conference saw Fed Chairman Jerome Powell reiterating that not being hurried to make any changes to the policy. Even though several Fed officials are open to interest rate reduction in July, the chances of happening are remote amid a strong employment report in June. The Fed will likely wait until September for monetary policy easing. During June 2025, the unemployment rate fell to 4.1% from 4.2% in May. Non-farm payrolls beat the market estimate of 110,000 by achieving a growth of 147,000 in June.

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