FOMC minutes support a probable rate cut in September

Despite expressing disappointment over recent inflation readings, Federal Reserve officials at their last policy meeting indicated they still believed that price pressures would gradually ease. This sentiment was reflected in the minutes of the Fed’s April 30-May 1 session.

Although the current policy response would “involve maintaining” the central bank’s benchmark policy rate at its current level, the Minutes released on Wednesday also included discussions of potential further hikes.

The minutes also revealed a debate about the restrictiveness of the current monetary policy in light of the economy’s strength. This discussion is crucial, considering the need for policy to be “sufficiently” restrictive to curb inflation.

Policymakers currently appear inclined to maintain the Fed’s benchmark rate in the 5.25%-5.50% range at least until September, after their confidence in easing price pressures was undermined by higher-than-expected inflation during the first three months of this year.