June FOMC minutes: Upside risks but little urgency

Research evidence excerpt

June FOMC minutes: Upside risks but little urgency

Barclays | Federal Reserve Commentary

the sentence in the June FOMC statement: "Job gains have kept pace with the workforce." The

fact that the unemployment rate has remained little changed could be consistent with that

statement. However, estimates from the BLS indicate that nonfarm payroll employment grew

on average by about 80k per month since January, while the labor force shrank notably during

the same period. To us, these diverging trends point to so far unexplained tension in the data.

Economic activity solid

Participants viewed activity as growing at a solid pace, supported by strong AI-related business

investment that showed no signs of slowing, and by resilient consumer spending. Some

participants noted that broad financial conditions were supporting demand. Participants

expected solid GDP growth to continue for the rest of this year, supported again by AI-related

investment and household spending, along with fiscal policy. However, given the conflict in the

Middle East, they viewed uncertainty about the outlook as elevated.

Monetary policy: A "family fight" on the policy stance and its outlook?

All 19 participants supported maintaining the policy rate unchanged at the June meeting. They

continued to assess the upside risks to price stability as elevated, while they viewed the

downside risks to achieving maximum employment as having "moderated a bit." A few

participants saw a case for raising rates in June, but supported keeping rates unchanged.

"A few participants commented that, in light of

these developments, there was a case for raising

the target range for the federal funds rate, but

those participants indicated that they supported

maintaining the current target range at this