Minutes uneventful but job revision raises odds for 50 bps in September

Because there is so much Fed speak in the weeks after an FOMC meeting, the minutes that come 3 weeks later are rarely revealing something new and today follows that pattern. The bottom line is that the Fed is cutting interest rates on September 18^th with the only question being whether it will be 25 or 50 bps. Rate cut odds are now 42% for 50 bps. The swing factor is clearly going to be their view of the state of the labor market on that day with inflation taking a back seat.

There was even this commentary on the possibility of them cutting at this July meeting, “All participants supported maintaining the target range for the federal funds rate at 5-1/4 to 5-1/2 percent, although several 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 this meeting or that they could have supported such a decision.” Note the word ‘several.’