1. A little
- A few respondents noted that companies remained reluctant to lay off workers after having difficulty obtaining employees earlier in the post-pandemic period.
- A few participants also added that a 25 basis point move could indicate a more predictable path to policy normalization.
- A few participants noted that the overall path of policy normalization, rather than the specific amount of initial easing at this meeting, would be more important in determining the degree of policy restriction.
2. Some
- However, some participants noted that labor market conditions remained strong, as layoffs were limited and initial claims for unemployment insurance benefits remained low.
- Some participants stressed that rather than using layoffs to reduce labor demand, companies instead took steps such as posting fewer job openings, reducing work hours, or taking advantage of attrition.
- Some participants noted that reducing policy constraints too early or too much could risk halting or reversing progress on inflation.
- Some participants noted that there was a reasonable case for a 25 basis point rate cut at the previous meeting.
3. Several
- Many participants noted that nominal wage growth is still slowing.
- Many participants stressed the importance of continuing to use disaggregated data or information provided by business contacts to verify readings on labor market conditions obtained from aggregated data.
- Many participants noted that reducing policy constraints too soon or too much could risk stalling or reversing progress on inflation.
- Many participants noted that with labor market supply and demand roughly balanced, wage increases are unlikely to be a source of general inflationary pressures in the near future.
- Several participants discussed the importance of noting that the ongoing reduction in the Fed’s balance sheet could continue for some time even as the Committee lowers the target range for the federal funds rate.
- Many participants noted that reducing policy restrictions too late or too little could unduly weaken economic activity and employment.
4. A lot
- Many participants noted that recent inflation data are consistent with reports from trade contacts, which have indicated that their pricing power is limited or diminishing and that consumers are increasingly looking for discounts.
- Many participants also noted that inflation developments in the second and third quarters of 2024 suggest that the stronger-than-expected inflation readings in the first quarter were only a temporary interruption of progress towards 2%.
- Many participants stressed that they expect real GDP to grow at approximately the same rate over the next few years.
- Many participants noted that assessing labor market developments was difficult, with increased immigration, revisions to reported salary data, and potential changes in the underlying growth rate of productivity cited as complicating factors.
- Many participants noted that recent inflation data was consistent with reports from companies that pricing power is waning.
5. Most
- Most participants had conditional expectations of a 25 basis point cut at this meeting.
- Most survey participants do not appear to be concerned about economic downturn in the near or medium term.
- Most noted that downside risks to employment had increased.
6. Almost all
- Almost all participants felt that the latest monthly readings were consistent with inflation sustainably returning to 2%.
- Almost all participants expressed greater confidence that inflation is moving sustainably toward 2 percent.
- Almost all participants agreed that the upside risks associated with inflation have diminished.
- Almost all participants agreed that the upside risks associated with inflation have diminished, and most noted that downside risks to employment have increased.
- Almost all members agreed that to adequately reflect cumulative developments on inflation and the balance of risks, the post-meeting statement should indicate that they have gained greater confidence that inflation is moving sustainably towards 2 per cent.
7. A large majority
- A large majority of participants supported lowering the target range for the federal funds rate by 50 basis points to 4-3/4 to 5%.
This article was written by Greg Michalowski at www.forexlive.com.