FOMC minutes back two cuts view – OCBC

On FOMC minutes, while it reflected a divided committee as expected, key quotes include the following, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Fed divided, but tilting toward easing

"'Most participants assessed that some reduction in the target range for the federal funds rate this year would likely be appropriate, noting that upward pressure on inflation from tariffs may be temporary or modest, that medium and longer-term inflation expectations had remained well anchored, or that some weakening of economic activity and labour market conditions could occur'. "

"'A couple of participants noted that, if the data evolve in line with their expectations, they would be open to considering a reduction in the target range for the policy rate as soon as at the next meeting'.

"While these are not fresh pieces of information – we have understood/heard from the June dot plot and subsequent official comments, wordings in the minutes itself appear enough to reinforce current market pricing of two 25bp Fed funds rate cuts while we still see room for a total of 75bps of cuts before year end."