US July 2024 FOMC Minutes: July cut was considered, while more appropriate to cut in September – UOB Group

While the FOMC members ultimately voted to stay on pause for the 8 th consecutive time in July, the minutes of the July FOMC indicated that participants viewed the incoming data as enhancing their confidence that inflation was moving toward the Committee's objective, UOB Group Senior Economist Alvin Liew notes.

Fed puts September rate cut into serious consideration

“The key takeaway from the US Federal Reserve’s (Fed) minutes of its 30/31 July 2024 Federal Open Market Committee (FOMC) meeting was that, while several participants thought it was plausible to cut rate in July, all participants ultimately agreed to hold rates. Importantly, the minutes noted that the “vast majority” thought it will be appropriate to cut rates in the September meeting.”

“The minutes indicated that the risks to inflation and unemployment are in better balance, while some see labor market at risk of more severe deterioration. Almost all the FOMC participants expect the progress of US disinflation to continue. Separately, BLS released the annual payrolls benchmark revision which lowered the jobs gain by 818,000 between Apr 2023 and Mar 2024, the largest revision since 2009. However, if we take other key data into consideration, the current situation is starkly different from (better than) 2009 despite the similar sized revisions.”

“After keeping the FFTR steady at 5.25-5.50% in the Julyy FOMC, we continue to hold the view the Fed will subsequently start to ease monetary policy in late 3Q, where we factor in 50 bps of rate cuts for the remainder of 2024. We still refrain from calling for a bigger 50-bps cut in September as the overall economic and labor market data still points to a soft US landing and aggressive easing is unnecessary at this juncture.”