FOMC Minutes Reveal Rate Cut Timeline - September Confirmed

The minutes from the June FOMC meeting, released Wednesday afternoon, revealed a Federal Reserve moving firmly toward its first rate cut in over two years. The minutes showed broad consensus that "if the data continues to evolve as expected, it would likely be appropriate to begin easing policy at the next meeting" - unusually direct language for a central bank famous for careful communication.

Key Passages from the Minutes

"Several participants noted that the conditions for beginning policy easing are approaching." Another key phrase: "a majority of participants viewed current policy as sufficiently restrictive," suggesting the committee believes rates no longer need to be this high to achieve the inflation goal. Three members favoured cutting in June itself, indicating the September decision will not be a close call.

Market Reaction

• Fed funds futures: September cut probability rose to 96%
• Gold: +$31 to $3,372
• 2-year Treasury yield: fell 10 bps to 4.08%
• DXY: fell 0.4% to 102.6
• EUR/USD: +45 pips to 1.1175

What Comes After September?

Markets are now pricing September as a near-certainty and debating the pace of subsequent cuts. Two additional 25 bps cuts by March 2027 are currently priced, implying a federal funds rate of 3.75% by early next year. If inflation continues softening, the pace could accelerate. If the economy surprises to the upside, cuts beyond September could be pushed back. Watch the August CPI (released in September) and the August jobs report (released September 5) as the final data points before the September 17 FOMC decision.