Fed Minutes Reveal Slow Progress on Inflation, Mixed Economic Signals

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A news conference with Federal Reserve Chair Jerome Powell appears on a monitor on the floor at the New York Stock Exchange in New York, May 1, 2024. The Federal Reserve delivers the minutes from its most recent interest rate policy meeting on Wednesday, July 3, 2024. (AP Photo/Seth Wenig, File)
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(AURN News) — The Federal Reserve’s recently released minutes from its June Federal Open Market Committee meeting paint a picture of modest progress in the fight against inflation, coupled with a robust stock market and varied credit conditions across different sectors of the economy. The information found in the minutes is extremely important as they provide insight into the decision-making process that has gone into how to deal with the major inflation the country has seen for years now. 

The minutes show that while financial markets have shown some improvement, particularly in equity prices, overall progress in curbing inflation has been limited. “Financial conditions eased modestly over the intermeeting period mainly because of higher equity prices,” the minutes stated, noting that conditions have changed little since March but eased notably since last fall.

Stock markets have performed well, with the Fed noting “broad stock price indexes increased substantially, on net, amid a positive investor outlook on corporate profits and economic activity,” according to the minutes.

Corporate borrowing remains strong, with the Fed saying that “financing was readily accessible for public corporations and large and middle-market private corporations through capital markets and nonbank lenders.” However, the situation differs for average consumers. The minutes reported that “consumer credit remained generally available over the intermeeting period despite some signs of tightening. In the residential mortgage market, access to credit was little changed and continued to depend on borrowers’ credit risk attributes.”

Looking ahead, the committee projects that inflation will “decline further in 2025 and 2026,” with expectations that both total and core PCE price inflation will approach 2 percent by 2026. Committee members acknowledged the lack of substantial progress in recent months, stating, “After a significant decline in inflation during the second half of 2023, the early part of this year had seen a lack of further progress toward the Committee’s 2 percent objective. Participants judged that although inflation remained elevated, there had been modest further progress toward the 2 percent goal in recent months.”

The major takeaway from the Fed’s notes is that we may need to brace for continued inflation issues through next year and potentially into 2026.


Click play to listen to the AURN News report from Jamie Jackson:

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