As most observers expected, the minutes of the July Fed meeting did not give a clear indication of future policy decisions. Two officials argued for a larger half-point cut in the Fed funds rate, while other parties voted not to cut rates at all. The markets’ initial reaction to the release of the meeting minutes was not material as the Dow Jones average held to its 250-point gain.
It does appear that any future rate action in September will be nuanced with a quarter-point cut now the consensus view. There simply is no single, one-point view at the Fed in the current environment and investors should not expect a series of rate cuts unless and until the economic data on employment and GDP turn down sharply.