Fed Minutes Reveal Divided Committee, Narrow Support for Rate Cut This Month

Federal Reserve policymakers appear divided over the need to cut interest rates in July, with minutes from the June policy meeting revealing only narrow support for easing monetary policy in the near term.

According to the minutes, several Federal Open Market Committee (FOMC) members stressed that more data is neededto be confident inflation is on a sustained path toward the Fed’s 2% target. While some officials indicated they would support a rate cut if the economy continues to slow as expected, others warned against moving too quickly and risking an inflation rebound.

The June meeting ended with the federal funds rate unchanged in its 5.25%–5.50% range, marking the seventh consecutive hold since the Fed’s last rate hike in July 2023. The minutes showed broad agreement that monetary policy is “restrictive,” but no consensus on how quickly to pivot toward easing.

Despite this debate, market participants continue to bet the Fed will lower rates before the end of 2025. Futures pricing suggests roughly a 60% probability of a quarter-point cut at the July 30–31 meeting, according to CME FedWatch. However, the minutes underscored that policymakers want to see convincing evidence that inflation is cooling, particularly in the services sector, before committing to cuts.

Economic data since the June meeting has offered mixed signals. Headline inflation has slowed compared to last year’s peaks but remains sticky in core services. Meanwhile, labor market data show some softening, with job openings declining and wage growth moderating, but overall employment remains strong. These crosscurrents have complicated the Fed’s calculus, leaving markets on edge for upcoming CPI and employment reports.

Some analysts interpreted the minutes as an effort to temper market expectations of a rapid easing cycle. “The Fed wants to keep its options open while avoiding a premature commitment to cuts,” said Lisa Martinez, chief economist at Capital Strategies. “They’re walking a tightrope between fighting inflation and supporting growth.”

Investors will be closely watching Fed Chair Jerome Powell’s upcoming testimony before Congress, as well as June CPI data, for clues about the likely direction at the July meeting. For now, the minutes suggest a divided central bank, weighing the risk of moving too fast against the danger of holding rates too high for too long.