Minutes of the Federal Open Market Committee July 30–31, 2024

Financial Market Developments - Financial conditions eased modestly, with lower long-term interest rates and higher equity prices, providing neither a headwind nor tailwind to growth[1] - Nominal Treasury yields declined, with shorter-term yields decreasing more than longer-term yields, leading to a steepening of the yield curve[2] - The effective federal funds rate remained unchanged at 5¼ to 5½ percent, while repo rates edged higher due to increased demand for financing Treasury securities[5] Economic Indicators - U.S. economic activity advanced solidly but at a slower pace than in the second half of 2023, with GDP growth noticeably slower than the average pace in 2023[7][9] - Consumer price inflation was 2.5 percent in June, with core PCE inflation at 2.6 percent, indicating inflation remains somewhat elevated[7] - The unemployment rate rose to 4.1 percent in June, with job gains moderating and labor market conditions easing[8][25] Policy Outlook - Market expectations indicate a first rate cut at the September FOMC meeting, with at least one more cut later in the year and further easing next year[2] - Participants noted that inflation had eased but remained above the 2 percent target, with recent data suggesting progress toward this objective[33][39] - The Committee agreed to maintain the target range for the federal funds rate at 5¼ to 5½ percent, emphasizing the need for greater confidence in sustainable inflation reduction before any rate cuts[37][43]