Core content of the July Federal Reserve meeting minutes:
Everyone is more concerned about inflation getting out of control, and worries about unemployment are temporarily pushed to the back. Tech stocks have risen too much, and we need to be cautious of a bubble. Companies are slowly passing tariff costs onto consumers, but the public's income isn't increasing, and the economy may slow down in the second half of the year.
There are differences internally regarding interest rate cuts: a minority wants to cut rates quickly, but the majority feel that it's better to stabilize first and then act based on the data. Waller and Bowman directly opposed the decision not to cut rates, and the disagreement was quite evident.
Whether or not to cut rates in the future depends on three things: whether the economic data is good, whether the outlook is stable, and how big the risks are, especially focusing on the long-term impact of tariffs and whether inflation will rebound. Stablecoins were discussed eight times, and their impact on the financial system needs to be studied thoroughly.
When the minutes were written, the July employment data hadn't been released yet, but there was already a vague concern that the labor market might weaken. Now that the Jackson Hole meeting has started, the whole market is waiting for Powell's speech tomorrow, and it's expected he will be non-committal, deciding whether or not to adjust interest rates based on the August data.
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