[News] Fed’s July FOMC Meeting: Rates Unchanged as Focus Shifts to Balancing Inflation and Employment Risks

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The Federal Reserve held its July FOMC meeting on July 31, deciding to keep the federal funds rate target range unchanged at 5.25% to 5.5%. In its post-meeting statement, the Fed noted signs of a cooling labor market and a slight uptick in unemployment, coupled with reduced inflationary concerns. The Fed’s focus has now expanded from primarily addressing inflation risks to a more balanced consideration of both inflation and employment risks.

 

During the post-meeting press conference, the Fed emphasized that if inflation continues to decline as expected, with economic growth remaining solid and the labor market holding steady, a rate cut could be discussed at the September FOMC meeting. Additionally, the Fed may adopt a gradual approach to lowering rates in the future. The Fed also noted that the labor market is gradually normalizing, and it aims to maintain the current employment situation without further deterioration. Therefore, key employment metrics, such as the unemployment rate and initial jobless claims, will be closely monitored.

 

Market expectations are now firmly anchored on a potential rate cut in September, with FedWatch data indicating an 87.5% probability of a quarter-point cut. The Fed is expected to continue a “wait-and-see” approach, gradually adjusting its policy based on ongoing economic conditions.

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(Photo Credit: Federal Reserve)