AUGUST 5, 2024 – A CHANGE IN MONETARY POLICY WILL DEPEND ON THE DATA
The Fed met last week and left rates unchanged. They did not confirm a rate cut is imminent, rather they reiterated that more progress is needed before interest rates cut come down. They are optimistic that inflation and employment data is moving toward a better balance, which will lead to monetary easing.
After the meeting ended, Fed Chair Jerome Powell said no decision has been made about what will happen at future meetings, but a September rate cut is possible if the future data shows inflation is easing. Following the Fed’s meeting, data showed initial jobless claims rose the most in 10 months, the new jobs report disappointed as the unemployment rate rose to 4.3 percent and the ISM manufacturing index came in worse than expected.
Fed officials will not base policy on forecasts, they need concrete data that confirms inflation is trending to the 2 percent target and the labor market is weakening. Borrowing costs remain the highest they have been in 23 years.