What did a few, some, several, many, a substantial majority of Fed officials agree on

1. A Few

• A few participants suggested that firms remained reluctant to lay off workers after having difficulty obtaining employees earlier in the post-pandemic period.
• A few participants also added that a 25 basis point move could signal a more predictable path of policy normalization.
• A few participants remarked that the overall path of policy normalization, rather than the specific amount of initial easing at this meeting, would be more important in determining the degree of policy restriction.

2. Some

• Some participants noted, however, that labor market conditions remained solid, as layoffs had been limited and initial claims for unemployment insurance benefits had stayed low.
• Some participants stressed that, rather than using layoffs to lower their demand for labor, businesses had instead been taking steps such as posting fewer openings, reducing hours, or making use of attrition.
• Some participants remarked that reducing policy restraint too soon or too much could risk a stalling or a reversal of the progress on inflation.
• Some participants noted that there had been a plausible case for a 25 basis point rate cut at the previous meeting.

3. Several

• Several participants noted that nominal wage growth was continuing to slow.
• Several participants emphasized the importance of continuing to use disaggregated data or information provided by business contacts as a check on readings on labor market conditions obtained from aggregate data.
• Several participants remarked that reducing policy restraint too soon or too much could risk a stalling or a reversal of the progress on inflation.
• Several participants observed that with supply and demand in the labor market roughly in balance, wage increases were unlikely to be a source of general inflation pressures in the near future.
• Several participants discussed the importance of communicating that the ongoing reduction in the Federal Reserve’s balance sheet could continue for some time even as the Committee reduced its target range for the federal funds rate.
• Several participants remarked that reducing policy restraint too late or too little could risk unduly weakening economic activity and employment.

4. Many

• Many participants remarked that the recent inflation data were consistent with reports received from business contacts, who had indicated that their pricing power was limited or diminishing and that consumers were increasingly seeking discounts.
• Many participants also observed that inflation developments in the second and third quarters of 2024 suggested that the stronger-than-anticipated inflation readings in the first quarter had been only a temporary interruption of progress toward 2 percent.
• Many participants emphasized that they expected that real GDP would grow at roughly its trend rate over the next few years.
• Many participants observed that the evaluation of labor market developments had been challenging, with increased immigration, revisions to reported payroll data, and possible changes in the underlying growth rate of productivity cited as complicating factors.
• Many participants remarked that the recent inflation data were consistent with reports from businesses indicating that pricing power was diminishing.

5. Most

• Most respondents had a modal expectation of a 25 basis point cut at this meeting.
• Most survey respondents did not appear to be concerned about an economic downturn in either the near or medium term.
• Most remarked that the downside risks to employment had increased.

6. Almost All

• Almost all participants judged that recent monthly readings had been consistent with inflation returning sustainably to 2 percent.
• Almost all participants expressed greater confidence that inflation was moving sustainably toward 2 percent.
• Almost all participants agreed that the upside risks to inflation had diminished.
• Almost all participants agreed that the upside risks to inflation had diminished, and most remarked that the downside risks to employment had increased.
• Almost all members agreed that to appropriately reflect cumulative developments related to inflation and the balance of risks, the postmeeting statement should note that they had gained greater confidence that inflation was moving sustainably toward 2 percent.

7. A Substantial Majority

• A substantial majority of participants supported lowering the target range for the federal funds rate by 50 basis points to 4-3/4 to 5 percent.

This article was written by Greg Michalowski at www.forexlive.com.