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Nick Timiraos, a Wall Street Journal reporter known as the FED spokesperson, shared his predictions for the July interest rate decision to be announced by the US Federal Reserve (FED) tomorrow.
According to Nick Timiraos, the Fed will not cut interest rates tomorrow.
“The Fed is Not Ready!”
Nick Timiraos said the Fed is not ready to cut interest rates this week, citing internal divisions.
Timiraos said authorities would eventually continue with interest rate cuts, but were not ready to do so this week.
Timiraos said Fed officials agreed to postpone the reductions due to inflation concerns stemming from the tariffs.
However, the prominent figure said that Fed members have differing views on how to interpret the evidence for a rate cut, given that inflation is running lower than expected and signs of loosening in the labor market are emerging.
“Fed officials appear likely to continue cutting interest rates, but they are not ready for this meeting.
What separates them is what evidence they will prioritize and whether it would be a mistake to wait for it.
The Fed was united when concerns arose that inflation would rise again because of the tariffs, but as tariff-driven inflation turns out to be lower than expected and employment shows signs of easing, divisions are emerging within the Fed.
FED Split into Three!
At this point, the Fed is divided into three camps: 1. Patient Hawks advocate for keeping interest rates high for longer to ensure inflation remains on a downward trend. 2. Data-Based Centrists seek additional evidence that economic conditions are sufficient to warrant a rate cut. 3. Dovish Advocates advocate for earlier rate cuts to mitigate the risks of a labor market slowdown.
Timiraos noted that two members are expected to vote against the interest rate decision, adding that markets will focus on whether Chairman Jerome Powell will signal a possible interest rate cut in his speech in September.
*This is not investment advice.