Fed says it’s not ready to cut rates until ‘greater confidence’ inflation is moving to 2% goal

Federal Reserve officials indicated in their June meeting that while inflation is improving, it's not yet sufficient to warrant a cut in interest rates, according to minutes released Wednesday.

“Participants affirmed that additional favorable data were required to give them greater confidence that inflation was moving sustainably toward 2 percent,” the meeting summary said.

There was disagreement among the 19 central bankers, with some leaning towards raising rates if necessary, but the Federal Open Market Committee ultimately voted to hold rates steady.

The Fed targets 2% annual inflation, which it has exceeded since early 2021. Officials noted recent data improvements but emphasized the need for more evidence of sustained progress.

The FOMC “dot plot” showed one quarter percentage point cut by the end of 2024, down from three in the previous update. Markets still expect two cuts starting in September.

While economic projections remained mostly unchanged, inflation expectations for this year were revised lower.

Discussions reflected differing views on policy approaches, with some advocating tightening if inflation persists and others emphasizing readiness to support the economy if needed.

Chair Jerome Powell suggested a balanced approach between managing inflation and sustaining economic growth during his recent remarks in Portugal.