Minutes taken at the U.S. Federal Reserve’s most recent meeting in July state that an interest rate reduction this September is “likely” to occur.
Specifically, the meeting summary says that “…if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting.”
Futures traders are betting 100% that the U.S. central bank lowers interest rates by at least 25-basis points at its next policy meeting scheduled for September 17-18.
The U.S. Federal Reserve has trailed other major central banks around the world, including the Bank of Canada and Bank of England, when it comes to lowering interest rates.
However, central bank officials in America are now coming around to the idea of rate cuts as inflation eases and there are signs of a slowing U.S. economy.
The latest Fed meeting minutes make clear that officials are growing increasingly confident about the direction of inflation and are ready to start easing monetary policy.
Inflation in the U.S. during July declined to an annualized rate of 2.9%, its lowest level in more than two years. Inflation peaked in America at 9.1% in June 2022 and has steadily fallen since.
At the same time, nonfarm payrolls for July showed job creation of 114,000 across the U.S. and a rise in the unemployment rate to 4.3%.
The U.S. central bank’s benchmark Fed Funds Rate is currently in a range of 5.25% to 5.50%, its highest level in 23 years.
