FOMC Minutes Turn Bearish, But Jobless Claims Above 225k Could Revive Bullish Case

The recent FOMC Minutes release has left investors disappointed again after the July meeting. Notably, the U.S. Fed’s decision on interest rates is a major macroeconomic event, watched by investors worldwide. Although there’s extreme pressure from the netizens and even the U.S. president Donald Trump, Jerome Powell is more focused on the impact of inflation. However, the jobless claims data, which dropped today, could revive the bullish case for a cut.

FOMC Meeting Remains Hawkish, Jobless Claims Carry Hope

In the July 29-30 FOMC Meeting, the Fed decided to keep the interest rate unchanged at 4.25-5.50. Almost all policymakers agreed to the stance, except the two, Michelle Bowman and Governor Christopher Waller, who support a 0.25% rate cut to shield weakening labor data. 

Also, Trump and the investors worldwide wish for the same. Now, the eyes are on the September interest rate cuts, whose expectations are quite high, yet questionable. Notably, the FOMC Minutes released yesterday turned bearish for investors.

The crypto market moved down, as the Fed showed more concerns about inflation risks rather than labor market weakening, creating a bearish case for September rate cuts. 

Just hours after the July Fed meeting, the Labor Department released its data, showcasing that much lower than the expected jobs were created in July. The unemployment rate increased as the Labor force participation decreased to the lowest since 2022, according to Reuters. 

More dramatically, it erased more than 250k jobs that were previously thought to exist. Meanwhile, Labor Department data shows that the weekly U.S. jobless claims rose to 235,000, its highest since June and above expectations of 226,000. 

September Rate Cuts Next?

Notably, the decision on the rate cut depends on multiple factors. Even if the bullish case forms (high rate cuts odds) with the Jobless claims, the Core CPI, PPI, and more also need to be considered, which came in strong. 

CoinGape experts note that the PPI jumped 3.3% YoY, marking the biggest spike in three years. This data supports policymakers’ arguments that the tariffs and inflation risks outweigh the need for interest rate cuts in September.

The Kobeissi Letter notes that the September Jobs report will eventually become the deciding factor for the interest rate decision. They also added that Jerome Powell can keep the rates steady if the inflation remains elevated.

The Fed can only justify rate cuts with one datapoint:

The labor market.

But, the Fed just said they see inflation risks outweighing employment risks in the Fed Minutes.

As we saw in September 2024, the Fed cut by 50 basis points and immediately “blamed” the labor market.

If…

— The Kobeissi Letter (@KobeissiLetter) August 20, 2025

Amid this, the CME FedWatch Tool shows a 79.1% chance of rate cuts, lower than the earlier 100% chance. Now, today’s Jobless claims and the upcoming Jerome Powell’s Jackson Hole speech could potentially give more clarity.