US Fed meeting summary points to probable policy rate cut in Sept

Markets are keeping in view a possible September cut in policy rates, which would be the first since the emergency easing in the early days of the COVID-19 pandemic.

“Several [meeting participants] 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,” the summary said.

One basis point is 0.01 percentage point (pp), so a 25 basis point reduction would be equivalent to a quarter percentage point.

“With regard to the outlook for inflation, participants judged that recent data had increased their confidence that inflation was moving sustainably toward 2 per cent,” the summary stated.

“Almost all participants observed that the factors that had contributed to recent disinflation would likely continue to put downward pressure on inflation in coming months,” it added.

ALCHEMPro News Desk (DS)