what to watch for
Fed Chair Kevin Warsh “observed” that cutting the Federal Open Market Committee’s meeting schedule from eight to six each year, with votes “held roughly every two months,” the minutes said. Warsh indicated this could provide policymakers more time to “consider strategic monetary policy issues” and review more economic reports. Warsh requested input from other officials, but no decision about scheduling changes was made.
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big number
34.6%. Those are the odds markets placed on an interest rate hike at the Fed’s September meeting, according to CME Group’s FedWatch tool. Those odds jump to 68.4% by December, before hitting 82.2% by April 2027.
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key background
Warsh and other Fed officials have said the central bank’s focus is on “restoring price stability,” after inflation surged amid a conflict in the Middle East earlier this year. Consumer prices briefly cooled in June during a brief peace deal between the U.S. and Iran, with inflation dropping in the largest month-to-month decline since April 2020, but a back-and-forth between the two countries has prevented oil prices from remaining at a lower level. Inflation rose at a 3.4% annual rate in July, according to federal data published last week, and some economists argued the rise in prices wasn’t enough to push the central bank toward an interest rate hike. Morgan Stanley Wealth Management chief economist Ellen Zentner said in emailed comments the latest inflation report would keep the “no need to hike rates” narrative alive for the Fed.
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further reading
ForbesInflation Rose As Expected In July—But Not Enough To Force An Interest Rate Hike, Analysts SayBy Ty Roush