According to CCTV News, on May 28, the Federal Reserve released the minutes of the Federal Open Market Committee (FOMC) meeting held from May 6 to 7. The minutes showed that the Fed agreed to maintain the federal funds rate target range between 4.25% and 4.5%. Participants unanimously agreed that the committee would carefully assess subsequent data, changing prospects, and risk balance when considering further adjustments to the federal funds rate target range. The minutes stated that the committee would continue to monitor how future information affects economic prospects when evaluating the appropriate monetary policy stance. They would be prepared to adjust the monetary policy stance as appropriate if risks might hinder the committee's objectives. Participants said their assessment would consider broad information, including labor market conditions, inflation pressures and expectations, and developments in financial and international situations.
The committee assessed that economic prospects' uncertainty has further increased, with risks of rising unemployment and inflation. Participants noted that the committee might face difficult trade-offs if inflation persists while economic growth and employment prospects weaken. The ultimate adjustment of government policies and their economic impact remain highly uncertain. In this context, all participants considered maintaining the federal funds rate target range between 4.25% and 4.5% appropriate. When considering monetary policy prospects, participants unanimously believed that given the continued robustness of economic growth and labor market, the committee is fully capable of waiting for clearer inflation and economic activity prospects. Maintaining a cautious attitude is appropriate before the net economic effects of a series of government policy adjustments become more apparent.
Additionally, according to Jinshi, the Fed meeting minutes indicated that the benchmark policy path implied by option prices (representing market mainstream expectations) slightly decreased during this period, suggesting potential rate cuts of 1 to 2 times (25 basis points each) by the end of the year.
