July Overview July ended with the Fed still on hold as expected, leaving the target range of its benchmark rate at 5.25-5.50%. In the Fed’s accompanying statement, it highlighted that the economy continues to hold up, even as the labor market slows, and higher levels of inflation subside. The committee remains aware of the risks of remaining too restrictive for too long, sharing that members are “attentive to the risks to both sides of its dual mandate” as the labor market begins to soften but higher than targeted levels of inflation remain. Appreciating that most participants see policy as restrictive and growth cooling, the statement, and the minutes from the last meeting released over the month, continue to share the same message, namely that when the data confirms that inflation is sustainably moving back to the Fed’s target, they’ll act. They remain encouraged by the progress made to date, however, and appear to be edging ever closer to action, as suggested by Powell in the post-meeting conference, but just need more time to be “more confident.”
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