FOMC Split in July Over US Inflation Concerns

FOMC Split in July Over US Inflation Concerns

FOMC Split in July Over US Inflation Concerns

In the minutes, the FOMC gave off the impression that inflation may take longer to pick up than originally thought.

FOMC members were worried last month about inflation, but for 2 opposing reasons.

One group of Fed policymakers felt inflation was falling too low and argued for caution in raising interest rates.

The other expressed concerns that delaying further rate hikes could push inflation higher into dangerous territory.

The policy debate was revealed in minutes released Wednesday of the FOMC’s 25-26 July meeting.

Officials made a unanimous decision to keep its Key policy rate unchanged in a range of 1 to 1.25%

The minutes also showed that several officials pushed for a July announcement that the Fed was ready to start reducing its massive bond holdings, a move that would likely mean slightly higher rates on mortgages and some other loans.

Policymakers decided in the end to signal that it would come “relatively soon”.

Analysts do not expect the Fed’s next rate hike to come until December. If inflation does not start moving higher again, they say it is likely the Fed will keep rates unchanged until next year.

The inflation debate explored a number of issues, the minutes showed, including the possibility that long-held views on the relationship between tight labor markets and higher inflation may no longer be valid.

The Fed’s next meeting is on 19-20 September

Stay tuned…

 

 

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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