Local time on July 9, the Federal Reserve released the minutes of the Federal Open Market Committee meeting held on June 17-18. The main contents are as follows:
• Interest rates remain unchanged: The Federal Reserve has kept the target range for the federal funds rate between 4.25% and 4.5%, marking the fourth consecutive time this rate range has been maintained since December 2024.
• Economic outlook assessment: Recent indicators suggest that economic activity continues to expand steadily, the unemployment rate remains low, and labor market conditions remain robust, although inflation rates are still slightly high. The uncertainty surrounding the economic outlook has decreased, but remains elevated.
• Clear divergence on rate cuts: The divergence among officials regarding the interest rate outlook largely stems from differing expectations about the impact of tariffs on inflation. Out of 19 officials, 10 expect at least two rate cuts by the end of the year, 7 officials predict no rate cuts at all in 2025, and 2 officials forecast one rate cut. A minority of participants support a rate cut in July, while most officials believe some form of rate cut this year may be appropriate, but decisions should be made cautiously.
• Doubts about tariff impacts: The majority of participants believe that tariffs may have a more lasting impact on inflation, but a small number believe it will only lead to a one-time price increase. There is “considerable uncertainty” regarding the timing, scale, and persistence of tariffs' potential impact on inflation.
• Monetary policy stance: When considering further adjustments to the magnitude and timing of interest rates, the committee will carefully assess subsequent data, outlooks, and risk balances, and will continue to monitor the impact of future information on economic prospects. If risks emerge that hinder achieving the targets, the monetary policy stance will be adjusted as appropriate.