FOMC Update
July 31, 2024
As expected, the FOMC did not change its benchmark rate range from 5.25%-5.50% for the eighth consecutive meeting. According to the statement, upside risks to inflation have decreased as the labor market has softened, and it noted that careful monitoring will be necessary for the potential lag of impact from policy in the labor market.Rates and Market:
- Fed Funds Target: 5.25%-5.50%
- Market Reaction: The S&P 500 ticked up to 5528, US Treasuries remained largely unchanged following the announcement. The market is still pricing a 95% chance of a 25bp rate cut at the September 2024 FOMC meeting.
The FOMC announced the following actions and analysis:
- Unanimous policy vote.
- The Fed nodded to a softening job market by stating job gains “have moderated” and the jobless rate “has moved up but remain low”.
- The Fed is now attentive to risks on both sides of the mandate (low inflation and low unemployment) compared to their previous statement of being “highly attentive to inflations risks”.
- The Fed repeats they’re still waiting for greater confidence on inflation before any rate cuts.
- The Fed cut the Treasury runoff cap to $25B from $60B.