Inflation & Employment Risks - Inflation risks are tilted to the upside, while employment risks lean towards the downside [1] - The framework necessitates balancing both sides of the dual mandate [1] Monetary Policy Stance - The policy rate is 100 basis points closer to neutral than a year ago [2] - The stability of the unemployment rate allows for careful consideration of policy changes [2] - With policy in restrictive territory, adjustments to the policy stance may be warranted [2] - Monetary policy is not on a preset course [3] - Decisions will be based solely on data assessment and its implications for the economic outlook and balance of risks [3]

Monetary Policy Framework - The policy decisions are guided by principles that consider deviations from goals and varying time horizons for achieving the dual mandate of maximum employment and price stability [1] - Monetary policy is forward-looking, considering the time lags in its effects on the economy, thus policy actions depend on the economic outlook and balance of risks [2] - Setting a numerical goal for employment is considered unwise because the maximum level of employment is not directly measurable and changes over time for reasons unrelated to monetary policy [3] - A longer-run inflation rate of 2% is viewed as most consistent with the dual mandate goals, and commitment to this target helps keep longer-term inflation expectations well anchored [3] Inflation Target - Experience has shown that 2% inflation is low enough to ensure that inflation is not a concern in household and business decision-making while also providing a central bank with some policy flexibility to provide accommodation during economic downturns [4] Review Cycle - The consensus statement retained a commitment to conduct a public review roughly every 5 years to reassess structural features of the economy and engage with the public, practitioners, and academics on the performance of the framework [4][5]

Monetary Policy Stance - The policy rate is 100 basis points closer to neutral than a year ago [2] - Policy is not on a preset course and may warrant adjusting [2] - Decisions are based solely on data assessment and its implications for the economic outlook and balance of risks [3] Economic Outlook & Risk Assessment - Near-term inflation risks are tilted to the upside, and employment risks to the downside [1] - The framework calls for balancing both sides of the dual mandate (inflation and employment) [1] - The stability of the unemployment rate allows for careful consideration of policy changes [2]

Economic Outlook - Downside risks to employment are rising [1] - Tariff effects on consumer prices are clearly visible [1] - Tariff impact on inflation is expected to be short lived [1] Monetary Policy - A rate cut is anticipated next month [1]

Monetary Policy - The Fed is abandoning its 2020 flexible average inflation targeting framework [1] - Stable inflation expectations cannot be taken for granted [1] - Uncertain estimates that employment may exceed its maximum sustainable level do not necessarily warrant policy tightening [1] - Preemptive action may be needed if a tight labor market risks price stability [1] Inflation & Tariffs - The impact of tariffs on consumer prices is now clearly evident [1]

Monetary Policy Outlook - Powell indicates potential rate cuts due to rising employment risks [1] - The industry anticipates a possible policy adjustment based on the balance of risks [1] Economic Assessment - Risks to employment are increasing [1] - The industry's base case is that tariff impact on inflation will be short-lived [1]

One in five U.S. employers surveyed by the Conference Board plans to slow hiring in the second half of 2025 https://t.co/2puKpcwXtH ...

Summary of FOMC Meeting Minutes Industry Overview - The document pertains to the Federal Open Market Committee (FOMC) and its assessment of the U.S. economy, particularly focusing on inflation and employment dynamics. Key Points and Arguments 1. **Inflation vs. Employment Risks** - A majority of FOMC participants viewed the upside risk to inflation as greater than the downside risk to employment. Some participants considered the risks to be roughly balanced, while a couple of participants highlighted the downside risk to employment as more significant [2][7]. 2. **Payroll Growth Data** - The FOMC meeting occurred before the July employment report, which indicated weaker-than-expected payroll growth. The 3-month average of payroll growth was 150,000 at the time of the meeting, compared to a revised figure of 35,000 now [2]. 3. **Expectations on Inflation** - Participants generally expected inflation to rise in the near term but expressed uncertainty regarding the timing, magnitude, and persistence of tariff effects on prices. There was acknowledgment of potential lags between tariff increases and consumer price hikes due to various factors [3]. 4. **Tariff Impact on Prices** - Some participants noted that foreign exporters were absorbing a modest portion of the increased tariffs, while others anticipated that companies would increasingly pass these costs onto consumers over time. However, a few participants mentioned that companies were attempting to avoid raising prices due to weak final demand [3]. 5. **Economic Conditions** - The economy was considered to be at or near maximum employment, with a low unemployment rate. Some participants indicated that slower economic growth might lead to weaker labor market conditions, but others argued that this was not necessarily indicative of economic slack due to a decline in immigration affecting payroll growth [7]. 6. **Fed's Economic Forecast** - The Fed staff's economic forecast remained similar to the previous meeting, reflecting weaker-than-expected data and a slower pace of immigration. The staff projected a rise in the unemployment rate above the natural rate and a slight downgrade in inflation projections due to lower estimates of tariff passthrough to prices [7]. 7. **Balance Sheet and Monetary Policy** - The FOMC noted that the balance sheet runoff had proceeded smoothly, with reserves remaining abundant. Some participants expressed concerns that the rebuilding of the Treasury General Account could create pressures in money markets, but existing Fed tools could mitigate this [8]. 8. **Monetary Policy Framework Review** - The FOMC was close to finalizing changes to its monetary policy framework, with expectations to shift back to responding to deviations from maximum employment rather than just shortfalls, and to return to flexible inflation targeting as the main strategy [9]. Additional Important Content - The document includes various disclosures and regulatory information related to Goldman Sachs and its analysts, emphasizing the importance of considering this report as one factor in investment decisions [5][11][12]. This summary encapsulates the critical insights from the FOMC meeting minutes, highlighting the ongoing concerns regarding inflation, employment, and the broader economic landscape.

Inflation & Employment - The Fed minutes indicate a divided open market committee regarding the greater risk between upside risk to inflation and downside risk to employment [1][2] - A majority of participants judged the upside risk to inflation as the greater of the two risks [1] - Several participants viewed the two risks as roughly balanced, while a couple considered downside risk to employment the more salient risk [2] - Inflation is somewhat above the 2% goal, and the unemployment rate remains low, with employment at or near estimates of maximum employment [3] - The Fed expects inflation to increase in the near term, with tariff effects becoming more apparent [4] Economic Outlook - Uncertainty about the economic outlook remains elevated, and some participants mentioned indicators suggesting a softening in labor demand [3] - Growth of economic activity slowed in the first half of the year, and several participants expect growth to remain slow for the second half [6] - A decline in immigration is lowering both actual and potential output growth [6] - Increased use of AI in the workplace may lower employment going forward [6] Tariffs - Evidence suggests that domestic businesses and consumers are predominantly bearing the tariff costs [5][6] - A few participants noted that tariff-related factors could lead to stubbornly elevated inflation [5]

Too Late Powell focused more on transient inflation than bleeding jobsSad!*Walter Bloomberg (@DeItaone):*FED: MAJORITY SAW INFLATION RISK OUTWEIGHING EMPLOYMENT RISK ...