Fed Wrap – Fed Holds and Needs More Good Data before their First Cut

Ryan Weldon, from IFM’s Debt Investments Team in New York, features in our Fed Wrap Market Update videos discussing central bank themes in debt markets, with a particular focus on the US Federal Reserve (Fed).

In this edition, Ryan discusses the outcomes of the July Fed meeting, the key points from the press conference and what to watch ahead of the next meeting.

At the July meeting, the Federal Reserve held rates, maintaining the upper band of their policy rate at 5.5% with no dissenting votes. The Fed used the statements to note that job gains have “moderated”, and that inflation has eased over the past year but remains “somewhat” elevated. Overall, the Fed believes that the risks to their goals of maximum employment and low inflation are moving into better balance, but they still will need greater confidence in inflation to cut. The interesting takeaway from the statement is that the Fed has shifted more of attention to their employment mandate, however, bringing inflation back to their 2% target is still their main focus.