Fed Meeting on July 31: Is a Rate Cut on the Horizon? Forecast

What to Expect from the Fed Meeting on July 31st?

As the Federal Reserve meeting on Wednesday, July 31st approaches, investors are eager to know what to expect from the US central bank, and especially from the words of Chairman Powell.

Previous Rate Changes and Future Expectations

The last time the Fed adjusted interest rates was in July 2023, raising them by 25 basis points to a range between 5.25% and 5.5%, the highest in 23 years.
Will there be a rate cut at the July 31st meeting, and what signs can we expect regarding the US economy?

Fed Meeting on July 31st: Rates Unchanged, Cut in September?

Most analysts believe that the Federal Reserve will keep its monetary policy unchanged at the upcoming FOMC meeting, using it as a signal that a rate cut is under serious consideration, likely in the following meeting in September.

Signals from the US Economy for the Fed

The economic scenario has both bright and dark spots.
While the Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge, increased by 2.5% in the past year up to June, the GDP growth surpassed economists’ expectations at 2.8% in the second quarter.
However, with slowing growth and rising unemployment, the economy appears increasingly vulnerable, raising the need for caution from the Fed.

Unemployment has risen from a low of 3.4% in April last year to 4.1% in June, above the Fed’s year-end projection of 4%.
High rates might significantly harm the labor market and further shake business and consumer confidence, ultimately jeopardizing US recovery.

The Fed’s decision-making process will be crucial in navigating these economic challenges and ensuring a stable path forward for the US economy.