FOMC Minutes point to lower inflation ahead

A few officials at the Federal Reserve’s June 17-18 meeting expressed the view that interest rates might decrease as early as this month, while the majority of policymakers continued to have concerns regarding the inflationary pressures anticipated from President Donald Trump’s implementation of import taxes aimed at altering global trade, the FOMC Minutes noted.

The Minutes released on Wednesday indicated that “most participants” at the Fed’s meeting anticipated that rate cuts would be appropriate later this year, noting that any price shock from tariffs was expected to be “temporary or modest.”

Key Quotes

Most participants at the Fed’s June 17–18 meeting saw some reduction in the Fed funds rate this year as appropriate, meeting minutes show.
A couple of participants noted they would be open to considering a rate cut as soon as the July meeting if data evolved as they expected.
Some participants said the most likely appropriate path would involve no rate cuts in 2025.

Those participants cited recent elevated inflation readings, elevated business and consumer inflation expectations, and ongoing economic resilience.
Several participants said the Fed funds rate may not be far above its neutral rate.
All participants viewed it as appropriate to maintain the Fed funds rate at the current target range.

Participants agreed the risks of higher inflation and weaker labour market conditions had diminished but remained elevated.
Participants observed uncertainty about the economic outlook had diminished amid a reduction in announced and expected tariffs, but overall uncertainty continued to be elevated.

Fed staff saw higher real GDP growth for 2025 than in the previous forecast and predicted inflation to be lower than the previous forecast.

The Greenback paid little attention to the release of the FOMC Minutes, with the US Dollar Index (DXY) hovering around the 97.50 zone amid marginal gains and following investors’ caution after President Trump’s threats of further tariffs.