Fed Signals September Rate Cut as Inflation Progress Noted

WASHINGTON, DC - Most Federal Reserve policymakers believe it will likely be appropriate to cut interest rates at the central bank's next meeting in September, according to minutes of their July 30-31 policy meeting released on Wednesday.

The minutes showed that "the vast majority" of Fed officials viewed the incoming economic data as enhancing their confidence that inflation was moving sustainably toward the central bank's 2% target. 

"If the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting," the minutes stated.

The Fed held its benchmark overnight interest rate steady in the 5.25%-5.50% range at the July meeting, but officials noted that recent indicators suggested economic activity had continued to expand at a solid pace while job gains had moderated.

Policymakers observed that inflation had eased over the past year and recent data indicated some further progress toward the Fed's inflation goal. 

However, they agreed that additional information was needed to provide greater confidence before lowering rates.

The minutes also showed officials discussing various economic risks, including the potential for labor market conditions to deteriorate more quickly than anticipated. 

Several participants noted the costs and challenges of addressing an economic weakening once it is fully underway.