Federal Reserve to 'likely' begin cutting rates in September, minutes show

By Ovunc Kutlu

ISTANBUL (AA) - The US Federal Reserve is "likely" to begin cutting interest rates in September, according to minutes of the central bank's most recent meeting that was released Wednesday.

"The vast majority (of FOMC members) observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting," it said.

"Most participants remarked on the importance of communicating the Committee’s data-dependent approach and emphasized, in particular, that monetary policy decisions are conditional on the evolution of the economy rather than being on a preset path or that those decisions depend on the totality of the incoming data rather than on any particular data point," it added.

The members of the Federal Open Market Committee (FOMC) agreed unanimously on July 31 keep the federal funds rate unchanged in the 5.25%-5.5% target range, which is the highest level in 23 years.

Fed Chair Jerome Powell later said in a post-meeting press conference that rising confidence on inflation and solid labor market could put September rate cut on table for the central bank.

Consumer inflation in the US annually rose 2.9% in July, slowing down from a year-on-year increase of 3% seen in June. On a monthly basis, however, CPI showed an increase of 0.2% in July, accelerating from June when it showed a monthly decline of 0.1%.

American economy added 114,000 jobs in July, significantly below market estimates of 176,000, while the unemployment rate increased to 4.3% in July from 4.1% in June.

The minutes said several FOMC members observed that the recent progress on inflation and increases in the unemployment rate had provided "a plausible case" for reducing the target range 25 basis points at the July meeting.