Citigroup downplays the meeting minutes' hawkish tone, while JPMorgan Chase highlights internal inflation divides at the Fed.

At the July meeting, three Federal Reserve officials voted against the decision to hold interest rates steady. They argued the Fed should raise rates, as core inflation stood at a high 2.6% at the time, well above the Fed’s 2% target. However, data released in August is undermining their case for further rate hikes. The July CPI report showed core prices, excluding volatile food and energy, rose 2.5% year-over-year, the lowest level since March 2021. Meanwhile, the July jobs report indicated the U.S. lost 23,000 jobs that month. Andrew Hollenhorst, chief U.S. economist at Citi Research, said these figures "will make it hard for the meeting minutes to meaningfully alter the market’s already reduced expectations for a rate hike." Still, the minutes will provide a clearer view of how large the divide was between the Fed’s hawks and doves during the July meeting. The minutes may also reveal how officials will define and assess inflation pressures moving forward. Michael Feroli, chief U.S. economist at JPMorgan, wrote that the minutes "could shed light on how much tolerance other FOMC members have for inflation running above target." (Jinshi)