The minutes from the FOMC’s July meeting were released and they suggest higher rates are likely unless inflation starts to slow down. The committee members voted 9-3 to hold rate steady, with the three dissenters having called for a 0.25 percent rate increase.
A rate increase was argued to be necessary to “likely help forestall the need for a steeper and potentially more costly sequence of tightening moves at a later stage.” The recent data has shown modest price increases, but inflation is continuing to run well above the targeted 2 percent. The Fed had shifted its focus onto inflation, but, unfortunately, the employment market has pulled back lately, with initial jobless claims rising back above 200,000.
The Fed will not meet again until mid-September, and there will be some key data released between now and then. The personal consumption index for July will be released this week, with core inflation expected to come in at 3.2 to 3.3 percent.