The Federal Market Open Market Committee decided to hold rates between 5.25% and 5.5% for the 8th straight meeting. However, Powell did not commit to a September rate cut arguing that when a cut does happen it will be data dependent.
The Committee’s explanation of the economy did see a slight change. In their release the Committee said “Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have moderated, and the unemployment rate has moved up but remains low. Inflation has eased over the past year but remains somewhat elevated. In recent months, there has been some further progress toward the Committee’s 2 percent inflation objective.”
- Job gains were changed from “remained strong” to “moderated” and the unemployment rate was described as “moved up but remain” changed from “remained low.”
- Inflation’s description changed from “remains elevated” to “remains somewhat elevated” and they changed “modest further progress” to “some further progress.”
The Committee also said that it “seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.”
- Inflation goals were changed from “have move towards better balance of the past year” to just “continue to move into better balance”
- Economic outlook was changed from “the Committee remains highly attentive to inflation risks” to “the Committee is attentive to the risks to both sides of its dual mandate.”
Looking Ahead
At the press conference Jerome Powell was asked about a rate cut in September. Powell noted that no decision has been made about the next meeting. “We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate, but we’re not quite at that point.” However, he did leave the door open telling Jeanna Smialek “If we were to inflation moving down quickly, growth remains reasonably strong, and the labor market remains consistent with its current condition, then a rate cut could be on the table at the September meeting.”
