Fundamental Comment

Fed minutes: Many officials saw need to cut rates, dollar continues decline

Many officials saw need to cut rates, dollar continues decline

According to the minutes of June 18-19 monetary policy meeting released on Wednesday, many Federal Reserve officials said they would be willing to cut interest rates if risks and uncertainties continued to weigh on the economic outlook, adding more pressure on the U.S. dollar.

Federal Reserve officials were split about whether to lower interest rates during their two-day meeting in the middle of June, with some members pushing for easier monetary policy.

“Many judged additional monetary policy accommodation would be warranted in the near term should these recent developments prove to be sustained and continue to weigh on the economic outlook,’’ the minutes said.

“Several” policy makers said a near-term rate cut was warranted from a risk-management perspective because it “could help cushion the effects of possible future adverse shocks to the economy,” the minutes revealed.

Many officials noted not only that risks to inflation were weighted to the downside, expressing their concern about the ability of the rate to reach the 2 percent goal.

In addition, Fed Chairman Jerome Powell told lawmakers in testimony Wednesday that the economic outlook hasn't improved since June's meeting.

The US index continued to decline after the Fed minutes, yet it decreased during the testimony of the Fed’s Chairman due to the high expectation of rates cut confirmed by Powell.

As of 14:30 ET, the US dollar index decreased by 0.38 percent to be 97.13, affected by the minutes of the Fed and the testimony of Powell.

The USD/JPY pair slipped 0.36 percent to 108.45, while the euro soared to a high of 1.1264 versus the greenback.

On the other hand, U.S. stocks were higher in the wake of Powell’s remarks, with the Dow Jones Industrial Average moving up by 0.28 percent up 75 points, as of 14:30 ET.

Gold prices jumped high after the minutes to break the one percent increase reaching $1,414.97 per ounce, augmenting 1.25 percent.

Share Article