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

As the Fed stays hawkish in the FOMC Minutes, the hopes are now pinned to today’s jobless claims, as a September rate cut could be confirmed.
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FOMC Minutes Turn Bearish, But Jobless Claims Above 225k Could Revive Bullish Case

Highlights

  • The latest FOMC Minutes disappointed investors as the Fed’s priority to mitigate inflation risk diminishes the odds of a September rate cut.
  • U.S. Jobless claims rose to 235,000, which strengthens the case for a rate cut.
  • Experts still fear Powell’s cautious approach; the upcoming Jackson Hole speech is considered crucial.

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.

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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. 

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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.

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. 

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Frequently Asked Questions

What were the outcomes of the last FOMC Meeting?

In the last FOMC Meeting, dated July 29-30, the Fed kept the interest rates unchanged at 4.25-5.50.

Why did the FOMC Minutes turn bearish for the crypto market?

The Fed expressed more concerns about the inflation risk, reducing expectations of September rate cut odds.

What economic indicators should investors check out now?

CPI, PPI data, labor reports, Jobless Claims, the Jackson Hole speech, and more should be monitored to understand the Fed’s stance.
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Pooja Khardia

Pooja Khardia is a seasoned crypto content writer with 6+ years of experience in writing, including in blockchain, cryptocurrency, DeFi, and digital finance reporting. In her adventure journey, she is currently working with CoinGape Media and leading their Trending Section. Here, she uses her expertise to deliver analytics, market insights, price predictions, and information on what’s trending in the crypto space, aiming to keep the crypto and web3 community updated with market trends and important insights. Known for a user-centric and straightforward writing style, Pooja is passionate about making crypto easy and accessible. Her writing blends market research with storytelling, helping readers stay ahead in a fast-paced industry. When not behind the keyboard, Pooja embraces her creative side through drawing and crafting. Connect with Pooja on LinkedIn or X.

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