Revealing Minutes

Something happened on Wednesday when the FOMC released the Minutes of their July policy meeting. Now, remember... The Minutes are released with a three-week lag, so rare is the release where we actually learn something important. That was not the case this time around. We learned that not only did a majority of committee members believe that it was likely appropriate to reduce rates at the September meeting should incoming data not upset that plan, but that there were members that at least considered cutting rates on July 31st.

The following quote taken from these Minutes, really tells all. "All participants supported maintaining the target range for the federal funds rate at 5-1/4 to 5-1/2 percent, although several observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this (July 31) meeting or that they could have supported such a decision."