Fed Minutes to reveal stance on rate cuts as Trump’s tariffs complicate economic policy path

The Minutes of the Fed’s June 17-18 policy meeting will be published on Wednesday.
Details surrounding the discussions on the decision to keep policy settings unchanged will be scrutinized by investors.
Markets see virtually no chance of a 25 bps Fed rate cut in July.

The Minutes of the United States (US) Federal Reserve’s (Fed) June 17-18 monetary policy meeting will be published on Wednesday at 18:00 GMT. Policymakers decided to maintain the policy rate at the range of 4.25%-4.5%, but the revised Summary of Projections (SEP) showed that policymakers were projecting two 25 basis-point (bps) rate cuts in 2025.

Jerome Powell and co decided to hold policy settings unchanged after June meeting

The Federal Open Market Committee (FOMC) decided to keep the interest rate unchanged at the June meeting. In the policy statement, the US central bank reiterated that inflation was still “somewhat elevated,” while labor market conditions remained solid with a low unemployment rate.

The SEP highlighted that policymakers still see a 50 bps reduction in the policy rate in 2025 but now forecast only a 25 bps cut in 2026, compared to the 50 bps projected in March’s SEP. In the post-meeting press conference, Fed Chairman Jerome Powell reiterated that they don’t need to be in a hurry to make any adjustments to the policy.

Although several Fed officials noted that they are open to the idea of lowering the interest rate in July, the upbeat June employment report reaffirmed that the Fed is likely to wait until September to ease the policy. The Unemployment Rate declined to 4.1% from 4.2% in May and Nonfarm Payrolls rose by 147,000, surpassing the market expectation of 110,000.

Economic Indicator

FOMC Minutes

FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.

When will FOMC Minutes be released and how could it affect the US Dollar?

The FOMC will release the minutes of the June 17-18 policy meeting at 18:00 GMT on Wednesday. Investors will scrutinize the discussions surrounding the policy outlook.

According to the CME FedWatch Tool, markets currently see virtually no chance of a rate cut in July and price in about a 36% probability of another policy hold in September. In case the publication shows that policymakers are unwilling to wait until after September to ease the policy, the US Dollar (USD) could come under renewed selling pressure with the immediate reaction.

On the other hand, the USD could remain resilient against its rivals if the document suggests that policymakers could look to delay rate cuts in case US President Donald Trump’s tariff decisions are seen as inflationary.

The White House announced late Monday that President Trump signed an executive order to push the deadline for implementing tariffs to August 1. However, letters sent out to trading partners by US President Donald Trump showed that they will be imposing 25% tariffs on Japan and South Korea. “If, for any reason, you decide to raise your tariffs, then, whatever the number you choose to raise them by, will be added on to the 25% that we charge,” Trump said in letters shared on Truth Social.

Eren Sengezer, European Session Lead Analyst at FXStreet, shares a brief outlook for the USD Index:

“The Relative Strength Index (RSI) indicator on the daily chart stays below 50 despite recovering steadily since early July. Additionally, the USD Index is yet to make a daily close above the 20-day Simple Moving Average (SMA), suggesting that another leg higher is needed to convince buyers.”

“On the upside, 97.80 (Fibonacci 23.6% retracement of the mid-May–July downtrend, 20-day SMA, upper limit of the ascending regression channel) aligns as a key resistance level ahead of 98.50 (Fibonacci 38.2% retracement) and 99.00-99.10 (50-day SMA, Fibonacci 50% retracement). Looking south, support levels could be spotted at 96.80 (mid-point of the ascending channel), 96.30 (end-point of the downtrend) and 95.80 (lower limit of the ascending channel).

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.