The July FOMC minutes highlighted growing concerns about labor market risks and reflected a dovish stance from the committee, JPMorgan economists said Wednesday.
“Participants were, just like many others, working to understand how much of the unemployment rise reported at the time of the meeting was due to rising labor supply and how that rise should be weighed against better-looking outcomes in measures like new jobless claims and layoff rates,” the bank's economists said.
Still, economists emphasized that the decision on whether to cut rates by 25 or 50 basis points at the September meeting heavily depends on the upcoming monthly employment report. The August employment data is expected to play a key role in determining the size of the rate cut in September. However, the July FOMC minutes suggest that many officials might be persuaded to support a 50 basis point cut in September, which remains Citi’s base case.
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