Newsroom
Minutes show divided FOMC; NAFCU's Long predicts another rate cut
Members of the Federal Open Market Committee (FOMC) – the Federal Reserve's monetary policy-setting arm – were divided ahead of committee's recent rate cut, according to minutes from the committee's July meeting released Wednesday. In addition, the committee begins its annual retreat today in Jackson Hole, Wyo., with Chairman Jerome Powell expected to speak Friday.
"The minutes from the FOMC's July meeting reflect the divisions within the committee, with the inflation issue in particular bringing it into stark relief, " said NAFCU Vice President of Research and Chief Economist Curt Long. "Two members wanted a 50 basis point cut in July due to the persistent shortfall in inflation below the committee's target, while others thought the recent rise in inflation justified their assessment that such weakness owed to transitory factors, and therefore warranted caution in easing policy.
"The events since the July meeting will only drive those two factions further apart and present a real challenge for Chairman Powell as he tries to present a unified front ahead of the September meeting," predicted Long.
FOMC participants who favored the rate cut cited slower growth abroad, increasing risks to the economic outlook and the persistent shortfall in inflation.
The committee also acknowledged ongoing risks associated with trade uncertainty, with several of participants reporting that their business contacts were making decisions based on their belief that trade uncertainties would likely continue.
Following the July meeting, the committee cut interest rates by 25 basis points and moved to end its balance sheet adjustment in August – two months earlier than previously indicated.
Minutes released Wednesday also revealed that participants:
- continued to view sustained expansion of economic activity, strong labor market conditions and inflation near the committee's symmetric 2 percent objective as the most likely outcomes;
- agreed that the labor market had remained strong since their last meeting; and
- favored a future approach in policy that would be guided by incoming information and its implications on economic outlook, instead of following a preset course.
"The best guess at this point is for another 25-basis point cut, but that is not the foregone conclusion financial markets are assuming. Friday should provide more clarity as Powell speaks at the Fed's annual Jackson Hole conference," Long added.
The FOMC will next meet Sept. 17-18.
Share This
Related Resources
Add to Calendar 2024-05-03 14:00:00 2024-05-03 14:00:00 Plan Sponsor Attitudes Toward Retirement Plan Management and Fiduciary Outsourcing About the Webinar In January 2024, Pentegra conducted a survey of retirement plan sponsors and their perspectives on retirement plan management and fiduciary outsourcing. The survey measured how sponsors are using fiduciary outsourcing to help better manage their retirement plans. It also captured their perspectives on what outsourcing does to help them better position their plans and drive improved retirement plan outcomes. Key Takeaways: What is the full scope of your responsibilities as a plan sponsor? What is fiduciary outsourcing and how does it work? How does fiduciary outsourcing help reduce workloads and minimize risk? How can a credit union best position its plan to drive improved outcomes? Register Here Web NAFCU digital@nafcu.org America/New_York public
Plan Sponsor Attitudes Toward Retirement Plan Management and Fiduciary Outsourcing
preferred partner
Pentegra
Webinar
Ensuring Safety and Soundness with AI
Management, Consumer Lending, FinTech
preferred partner
Upstart
Blog Post
Turning Lemons into Lemonade: Capitalizing in a Post-Banking Crisis Era
Strategy
preferred partner
Allied Solutions
Blog Post
Add to Calendar 2024-05-02 14:00:00 2024-05-02 14:00:00 Mastering Resilience in Incident Response Plans About the Webinar An Incident Response (IR) plan is crucial for guiding credit unions through major incidents efficiently and effectively. However, many IR plans lack resilience, making them less adaptable to the evolving threat landscape. Join us for our webinar Mastering Resilience in Incident Response Plans where DefenseStorm cyber experts Elizabeth Houser and James Bruhl will delve into the importance of resiliency within cybersecurity IR plans. Don’t miss out on the opportunity to learn how to: Ensure IR plan accessibility so that all team members with assigned roles are prepared for effective incident response. Conduct efficient and regular reviews to ensure roles and responsibilities are current, tools are relevant, and compliance requirements are met. Implement and utilize tabletops to regularly test the effectiveness of your IR plan. Enhance preparedness, efficiency, and confidence among responders. View On-Demand Web NAFCU digital@nafcu.org America/New_York public
Mastering Resilience in Incident Response Plans
preferred partner
DefenseStorm
Webinar
Get daily updates.
Subscribe to NAFCU today.