Minutes from the Federal Reserve’s July meeting are set to be released at 2 p.m. ET Wednesday, and they will likely indicate that only a few officials were in favor of maintaining current interest rates for the rest of the year.
This insight was shared by Bloomberg economists Anna Wong and Stuart Paul on Wednesday ahead of the Federal Open Market Committee’s meeting minutes.
The minority of FOMC members who advocated for unchanged rates after July might have reservations due to a worsening credit landscape. Federal Reserve Chair Jerome Powell‘s slightly dovish remarks during the Fed’s most recent post-meeting press conference hint at his alignment with this group.
The latest remarks from various Fed officials suggest a potential shift in the unanimous support for the rigorous rate hikes seen over the last 18 months. For instance, Philadelphia Fed President Patrick Harker hinted at a possible halt in rate hikes, while Fed Governor Michelle Bowman expressed hawkish views.
Minneapolis Fed President Neel Kashkari stressed the importance of avoiding early loosening of monetary conditions that would be reminiscent of the 1970s.
Investors are leaning against another rate hike this year, with futures contracts indicating a mere 10% probability for a September rate increase and a 38% chance by November. The market predicts a 75% chance of the first rate cut by May 2024.
Recent economic reports, including a lower-than-expected wage growth study on July 28 and a declining unit labor cost report on Aug. 3, might influence the committee’s stance on future rate decisions, Bloomberg’s Wong and Paul noted.
Market-Implied Odds According To Fed Futures (CME Group)
| MEETING DATE | DAYS TO MEETING | EASE | NO CHANGE | HIKE |
|---|---|---|---|---|
| 09/20/2023 | 35 | 0.00% | 90.50% | 9.50% |
| 11/01/2023 | 77 | 0.00% | 61.42% | 38.58% |
| 12/13/2023 | 119 | 8.15% | 57.99% | 33.86% |
| 01/31/2024 | 168 | 23.73% | 50.80% | 25.48% |
| 03/20/2024 | 217 | 46.08% | 38.80% | 15.12% |
| 05/01/2024 | 259 | 75.62% | 19.95% | 4.43% |
| 06/19/2024 | 308 | 83.53% | 13.69% | 2.78% |
| 07/31/2024 | 350 | 92.87% | 6.14% | 0.99% |
| 09/25/2024 | 406 | 97.47% | 2.24% | 0.28% |
| 11/06/2024 | 448 | 98.86% | 1.02% | 0.12% |
| 12/18/2024 | 490 | 99.59% | 0.37% | 0.04% |
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo: Shutterstock.
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