The June meeting minutes mentioned three times that the Federal Reserve really lacks confidence in cutting interest rates

The minutes of the June meeting released overnight showed that the Federal Reserve has not yet fully established confidence in cutting interest rates.

Analysts such as Jonathan Pingle and Amanda Wilcox from UBS pointed out in their latest report that the FOMC emphasized three times during the meeting the need for more favorable data to enhance their confidence in inflation reaching the 2% target. The FOMC mentioned inflation once during the discussion and twice during the discussion of monetary policy.

The minutes stated:

In discussing the outlook for monetary policy, participants noted that the slowdown in inflation this year was slower than they had expected in December last year. They emphasized that they should not lower the federal funds rate target range until they have more information to give them confidence that inflation is sustainably moving towards the Committee's 2% target.

Labor Market Remains Strong

Despite the slowdown in economic growth, FOMC members generally believe that the labor market remains strong. However, there are differing views among members on the outlook for the labor market.

Some members mentioned that although wage growth last year may have been overestimated, employment growth remains solid. However, some members warned that a slowdown in the pace of labor market expansion could lead to higher layoff rates, which could have a significant impact on the labor market.

The minutes particularly emphasized the Beveridge Curve. In economics, the Beveridge Curve is used to describe the relationship between the unemployment rate and the job vacancy rate. Typically, when the job vacancy rate increases, the unemployment rate decreases because there are more job opportunities for job seekers to choose from.

The minutes showed that FOMC members closely monitor the dynamics of the Beveridge Curve, with some members pointing out that if the job vacancy rate falls to 4.5%, it may already be close to or exceed certain thresholds, indicating that future unemployment rates may rise more "non-linearly" (sharply).

However, UBS pointed out the limitations of this view. Firstly, it overlooks the fact that when the job vacancy rate was 6.0%, the unemployment rate was actually rising rapidly and has since increased by 0.6 percentage points.

UBS believes that a slowdown in the pace of labor market expansion typically leads to more layoffs, which is a normal economic phenomenon and should not be surprising. In contrast, the FOMC seems to believe that even if the labor market slows its expansion, it can still maintain a "strong" state.

UBS also mentioned that for most of the past 50 years, the U.S. labor market has operated with a job vacancy rate below 4.5% without experiencing this "non-linear" rise in unemployment rates.

Major Concerns - Economic Pressure on Low-Income Families

The minutes pointed out that FOMC members noted that the economic pressure faced by low-income families is a major concern. The "vast majority" of participants believe that economic growth is "gradually cooling," which may indirectly affect low-income familiesIn terms of monetary policy, there are divergent views among FOMC members regarding the current monetary policy stance. While most members believe that the monetary policy is restrictive, not "almost all" members agree on this point.

When discussing the possibility of future interest rate adjustments, there are also differing views among FOMC members.

Some members emphasize the need for patience, allowing the existing restrictive policy stance to further restrain total demand and inflationary pressures. However, other members warn that if inflation remains high or continues to rise, there may be a need for rate hikes