Breaking: Fed Minutes noted almost all participants advocated for keeping status quo
According to the FOMC Minutes, the two Federal Reserve (Fed) policymakers who disagreed with the central bank's decision to keep interest rates unchanged last month were not joined by other policymakers in calling for lower rates at that meeting.
Key Quotes
Almost all participants at the Fed’s July 29–30 meeting viewed it as appropriate to maintain the benchmark interest rate in the 4.25%–4.50% range.
Participants noted it would take time to have more clarity on the magnitude and persistence of higher tariffs’ effects on inflation.
Participants assessed the impact of tariffs had become more apparent in goods prices, but overall effects on the economy and inflation remained to be seen.
A couple of participants highlighted the role of the standing repo facility in monetary policy implementation and expressed support for further study of central clearing of the srf.
Some participants said it would not be feasible or appropriate to wait for complete clarity on the tariffs’ effects on inflation before adjusting monetary policy.
Several participants said the current target range for the federal funds rate may not be far above its neutral level.
Fed staff’s real GDP projection for 2025 through 2027 was similar to the one prepared for the June meeting.
Participants said the consensus statement would be designed to be robust across a wide range of economic conditions.
Participants noted that the policy committee was close to finalizing changes to the consensus statement as part of the framework review.
Market reaction
The Greenback remains on the back foot after the release of the FOMC Minutes on Wednesday, with the US Dollar Index (DXY) navigating the low-98.00s amid a widespread retracement in US yields.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | 0.22% | -0.29% | -0.01% | 0.35% | 1.26% | -0.52% | |
| EUR | 0.14% | 0.35% | -0.24% | 0.12% | 0.52% | 1.32% | -0.40% | |
| GBP | -0.22% | -0.35% | -0.53% | -0.23% | 0.10% | 0.88% | -0.73% | |
| JPY | 0.29% | 0.24% | 0.53% | 0.33% | 0.69% | 1.57% | -0.06% | |
| CAD | 0.01% | -0.12% | 0.23% | -0.33% | 0.39% | 1.27% | -0.50% | |
| AUD | -0.35% | -0.52% | -0.10% | -0.69% | -0.39% | 0.78% | -0.83% | |
| NZD | -1.26% | -1.32% | -0.88% | -1.57% | -1.27% | -0.78% | -1.68% | |
| CHF | 0.52% | 0.40% | 0.73% | 0.06% | 0.50% | 0.83% | 1.68% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the FOMC Minutes of the July 29-30 meeting at 13:15 GMT.
- The Minutes of the Fed’s July 29-30 policy meeting will be published on Wednesday.
- Details surrounding the discussions on the decision to keep policy unchanged will be scrutinized by investors.
- Markets widely expect the Fed to opt for a 25 bps rate cut in September.
The Minutes of the United States (US) Federal Reserve’s (Fed) July 29-30 monetary policy meeting will be published on Wednesday at 18:00 GMT. The US central bank decided to maintain the policy rate in the range of 4.25%-4.5% at this meeting, but Fed Governors Christopher Waller and Michelle Bowman dissented, preferring to lower the fed funds rate by a quarter of a percentage point.
Jerome Powell and company decided to hold policy settings unchanged at July meeting
The Federal Open Market Committee (FOMC) decided to keep the interest rate unchanged at the July meeting. In the policy statement, the Fed reiterated that inflation was still “somewhat elevated,” while pointing out that recent indicators suggested growth of economic activity moderated in the first half of 2025.
In a statement published a few days after the July meeting, Fed Governor Waller explained that he dissented because he saw tariffs as a one-time price event that policymakers should “look through” as long as inflation expectations remain anchored. Similarly, Fed Governor Bowman argued that slowing growth and a less dynamic labor market make it appropriate to begin gradually moving the moderately restrictive policy stance toward a neutral setting. She added that they should start putting more weight on risks to the employment mandate.
Meanwhile, the data that were released after the meeting painted a mixed picture. Nonfarm Payrolls (NFP) in the US rose by 73,000 in July, but NFP increases for May and June were revised down by 125,000 and 133,000, respectively. Recently, the US Bureau of Labor Statistics reported that annual inflation, as measured by the change in Consumer Price Index (CPI), remained unchanged at 2.7% in July. On a more concerning note, the Producer Price Index (PPI) rose by 3.3% on a yearly basis, up sharply from the 2.4% increase recorded in June.
When will FOMC Minutes be released and how could it affect the US Dollar?
The FOMC will release the Minutes of the July 29-30 policy meeting at 18:00 GMT on Wednesday.
According to the CME FedWatch Tool, markets are currently pricing in about an 83% probability of a 25-basis-point (bps) rate cut at the next meeting. This market positioning suggests that the US Dollar (USD) could weaken against its rivals with immediate reaction, in case the publication shows that policymakers are willing to ease the policy rate in September. On the other hand, the USD could hold its ground if the discussions highlight that most Fed officials remain reluctant to lower rates, given the uncertainty surrounding the impact of tariffs on the inflation outlook.
Nevertheless, the market reaction to the FOMC Minutes could remain short-lived because the meeting took place before the latest employment and inflation data releases. Moreover, investors could opt to wait for Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium before taking large positions on the Fed’s possible policy outlook.
Eren Sengezer, European Session Lead Analyst at FXStreet, shares a brief outlook for the USD Index:
“The Relative Strength Index (RSI) indicator on the daily chart stays slightly below 50 and the US Dollar (USD) Index fluctuates at around the 20-day and the 50-day Simple Moving Averages (SMAs), reflecting a neutral stance in the near term.
“On the upside, the 100-day SMA aligns as a key resistance level at 99.00 ahead of 99.80-100.00 (Fibonacci 23.6% retracement of the January-July downtrend, psychological level) and 101.65 (Fibonacci 38.2% retracement). Looking south, support levels could be spotted at 97.50 (static level), 96.50 (end-point of the downtrend) and 95.50 (mid-point of the descending regression channel).”
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Author
FXStreet Team
FXStreet
