Fed’s July #FOMCMinutes Reveal Inflation Concerns and Diverging Views
The minutes from the Federal Reserve’s July 29–30 Federal Open Market Committee (FOMC) meeting, released on August 20, 2025, confirm that policymakers opted to maintain the federal funds rate at 4.25%–4.50%, with a clear emphasis on inflation risks over labor market concerns .
Despite labor market softening—evident in disappointing job data—most FOMC participants voiced greater apprehension about persistent inflation, particularly the unclear and potentially lasting effects of tariffs .
Notably, there was a rare dissent: Governors Michelle Bowman and Christopher Waller both favored an immediate 25 basis-point rate cut, the first dual dissent since 1993 . Their concerns—mirroring the downward trend in labor indicators—have heightened market speculation that a rate reduction could materialize soon.
Indeed, the CME FedWatch Tool now estimates approximately an 85% probability of a rate cut in September . That said, hawkish sentiment persists among a majority of officials, who continue to weigh inflation risks heavily.
The minutes also highlight growing uncertainty about how tariffs will feed into inflation, underscoring the Fed’s cautious stance and the challenge of balancing economic growth with price stability .
As markets absorb these insights, all eyes turn toward Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium, expected to provide clearer signals on the Fed’s forward path .
In summary, while the July minutes underscore a broadly hawkish tone, rising labor concerns and growing dovish pressure suggest the Fed could lean toward easing in the near term—depending on how new data unfolds.
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