The US Federal Reserve Board (Fed) released the minutes from its last meeting. The Fed held steady in June, citing solid economic conditions and moderating inflation. US President Donald Trump has often expressed his dissatisfaction with the Fed for not lowering interest rates. Fed Chair Jerome Powell continues to reiterate the central bank’s commitment to maintaining price stability and maximizing employment, despite calls from President Trump to lower rates.

• The Fed held its federal funds rate at a target range of 4.25%–4.50% in response to solid economic activity, relatively elevated inflation and a resilient labour market.
• Fed officials are divided on the potential impact of tariffs on inflation, which has contributed to the Fed holding steady. There is uncertainty on when and by how much tariffs could impact inflation.
• Most officials believe a rate cut is likely this year, but they agree the Fed can be patient amid stable economic conditions.
• Economic uncertainty has risen this week after President Trump provided details on higher tariffs set for August 1. He also announced a 50% tariff on copper, shaking commodity markets. The US is looking to increase domestic mining and smelting activity.
• The US real estate market saw some signs of optimism. The Mortgage Bankers Association of America reported that mortgage applications rose by 9.4% over the week ended July 4. This was the third straight increase and the largest since May. The rate on a 30-year fixed-rate mortgage ticked lower over the same week.

The Fed minutes did little to pinpoint an exact timeframe for a rate cut. However, a rate cut seems likely this year. Recent tariff announcements provide a bit of clarity, which might help the Fed formulate its monetary policy decisions. The Fed seems committed to taking a wait-and-see approach as it monitors the impact of tariffs on inflation and the US economy.

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