TechFlow news, according to Jinshi Data, the Federal Reserve released the minutes of its June FOMC meeting early today. The minutes revealed that the decision to pause rate hikes during the meeting was fragile. Although nearly all officials viewed holding interest rates steady as "appropriate or acceptable," they anticipated further rate increases in 2023 to combat persistent inflation. Officials supporting tighter policy pointed out that the labor market remains extremely tight, economic momentum has exceeded expectations, and there is no evidence yet that inflation will gradually return to the 2% target.
The minutes also showed that at the June meeting, nearly all Fed officials unanimously agreed to keep rates unchanged to buy time assessing whether further hikes would be needed, but a majority expected tightening measures would ultimately be required. Chair Powell successfully secured support from all officials for the June pause, but maintaining this consensus will be challenging. Fed officials expect two more rate hikes this year.
Despite strong GDP performance in recent quarters, officials noted downside risks to economic growth and rising unemployment. Some expressed concern that core inflation has shown little change over the past six months. In addition, the outlook for cash holdings in the reserve and reverse repo markets at the Fed remains highly uncertain.
After the release of the minutes, U.S. Treasury yields rose while U.S. stocks declined. Investors will closely watch the upcoming June nonfarm payrolls report for signs of a cooling labor market, which could influence discussions on whether to raise rates in September.
