The Federal Reserve’s June Minutes Could Reveal if a September Cut Is Likely

Federal Chair Jerome Powell checks his watch as he arrives to chair a Federal Reserve Board open meeting in June. (SAUL LOEB / AFP / Getty Images)

The Federal Reserve could be inching toward an interest-rate cut and Wednesday’s meeting minutes may show just how close the majority of officials believe they are.

The minutes, due out at 2 p.m. Eastern time, cover the Fed’s June 17-18 policy meeting, where officials held rates steady between 4.25% and 4.50% and signaled two cuts by year-end.

Investors will be reading for clues that the Fed’s wait-and-see phase is drawing to a close. Core inflation has come in lower than expectations for four consecutive months. Several officials, including Vice Chair for Supervision Michelle Bowman and Gov. Christopher Waller, have indicated that a July cut could be on the table. The strong June jobs report likely removed that option, but the underlying shift in tone is clear.

The minutes will likely walk back the high level of uncertainty expressed in the May meeting minutes. At the time, the committee said it needed more clarity on the effects of both monetary policy and fiscal developments, specifically on President Donald Trump’s tariff plans. That language now looks somewhat dated. The June statement acknowledged improved inflation readings, and the minutes may go further by suggesting that the committee expects to have the data it needs to make a rate cut by the end of the summer.

If that is the case, it would reinforce market expectations for a September move. Investors are currently pricing in a 95% chance that Fed officials hold rates steady at its coming July meeting and a 63% chance they lower rates at their September meeting, according to the CME FedWatch tool.

The minutes may also read more dovishly than Powell’s press conference following the June meeting, according to analysts at Citi. Powell leaned heavily on neutral language and emphasized ongoing risks to both sides of the Fed’s dual mandate (to maintain price stability and maximum employment) during that meeting, but the minutes could better reflect what Powell didn’t say explicitly: that the bar for cuts is falling.

The minutes could also expose the growing split inside the committee. The most recent dot plot revealed a clear divide. Some policymakers project two cuts this year while others predict none at all.

Morgan Stanley analysts say they will be looking for clues as to what is driving that bifurcation. More hawkish members could indicate that they are waiting for a higher unemployment rate or that they need more time to assess the inflation impact of tariffs and other fiscal policy.

Powell has said he expects the inflationary effects of tariffs to appear over the summer and has suggested that the only thing standing between the Fed and easing is uncertainty about those price pressures. If the minutes show even partial agreement with that view, it could mark a shift toward a more proactive stance.

Hawkish voices, like those of Cleveland Fed President Beth Hammack, that suggest rates should stay elevated for an extended period will be reflected in the minutes. But those views may be presented as outliers—Citi analysts expect the text to confirm that most officials still see rate cuts beginning before year-end, with the September meeting as the most likely inflection point.

Wednesday’s minutes may be a snapshot from a different moment, but they still offer a rare look under the hood at how unified, or not, the Fed really was.

Write to Nicole Goodkind at nicole.goodkind@barrons.com.