The Federal Reserve released the minutes of the Federal Open Market Committee (FOMC) monetary policy meeting from June 11 to 12, showing that officials are aware of signs of a slowing U.S. economy. However, while inflation is moving in the right direction, it is not enough to start cutting interest rates. They need to wait for “more information” to gain confidence in lowering interest rates.
Officials participating in the meeting believe that monetary policy should be prepared at any time to respond to unexpected economic weakness. They also listed some economic data that could support the continued decline in inflation over the next year, including slowing wage growth, declining pricing power for businesses, and increased consumer sensitivity to rising prices.
Overall, the meeting minutes show that officials are generally satisfied with their wait-and-see stance on interest rate changes. Combined with recent public statements from Federal Reserve officials, this indicates that the door to an interest rate cut in September is still open.
After the release of the interest rate dot plot last month, which showed that most Federal Reserve officials expect one or two rate cuts this year, the market focus is on whether the July 30-31 meeting will lay the groundwork for a rate cut in September.
Following the release of the meeting minutes, the CME Fed Watch tool shows that the market expects a 68.4% probability of a 0.25% to 0.5% interest rate cut in September, up from 61.5% the previous day. The probability of maintaining interest rates in September fell to 25.7% from 32.8% the previous day.
Stocks continued to rise while the currency markets continued to weaken on Wednesday, as U.S. stock markets closed early for Independence Day, with major indices reaching new highs. The Dow Jones Industrial Average fell 23.85 points or 0.06% to close at 39,308.00 points. The S&P 500 rose 28.01 points or 0.51% to close at 5537.02 points. The Nasdaq rose 159.54 points or 0.88% to close at 18,188.30 points. The Philadelphia Semiconductor Index rose 106.73 points or 1.92% to close at 5651.72 points.
However, despite the increased market expectations for a rate cut in September, the currency market continued to weaken. Bitcoin fell below $58,000 this morning, dropping to $57,800, the lowest since early May, and is now trading at $58,818, down 4.23% in the past 24 hours. Ethereum also fell 4.92% to $3216, while mainstream altcoins showed declines ranging from 5% to 11%.
