Still, they “did not expect it would be appropriate to lower the target range for the federal funds rate until there is additional information that gives them greater confidence that inflation is moving sustainably toward” the 2% target.
The improvement has so far been modest, so the move was not justified, despite signs that the economy was moving toward slower growth and easing pressure on prices, the minutes said.
“The vast majority of participants considered that economic activity growth appeared to be gradually cooling, and most participants indicated that they consider the current monetary policy stance to be restrictive” and therefore likely to further slow the economy and inflation.
In voting to keep the policy rate at 5.25% to 5.5%, where it has remained for a year, “participants indicated that progress in reducing inflation had been slower this year than they had expected last December,” the minutes said, with “some participants” stressing the need to be patient before cutting rates, while “several” mentioned the possible need to raise rates further if inflation resurged.
Data released on June 12 showed that the CPI did not rise on a monthly basis in May, an encouraging figure that came late to the Fed’s monetary policy deliberations.
In addition to holding rates steady, policymakers delayed the expected start of rate cuts at their June meeting, with new projections showing Fed policymakers anticipate only one quarter-point cut this year, down from three expected at their March 19-20 meeting.
The Fed’s next meeting is scheduled for July 30-31, and the benchmark rate is expected to remain unchanged.
By then, policymakers will have received an update on the labor market with the release of the June employment report on Friday, the June CPI report on July 11, and an initial estimate of second-quarter economic growth on July 25.
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