#FOMC July Minutes# The Federal Reserve's July 29-30, 2025, FOMC meeting minutes revealed a cautious tone on inflation and economic growth. Here are the key takeaways¹ ² ³:

- *Economic Outlook*: The committee noted a slowdown in economic growth, with real GDP growth relatively low in the first half of 2025. Consumer spending was strong, but investment slowed down.
- *Inflation*: The Fed's preferred inflation gauge, PCE inflation, stood at 2.5% (headline) and 2.7% (core) in June. Officials observed that disinflation has halted due to upward pressure from tariffs.
- *Labor Market*: Unemployment ticked down to 4.1% in June, with solid payroll gains. However, private hiring slowed, and wages increased 3.7% year-over-year.
- *Interest Rates*: The Fed kept rates at 4.25%-4.5% and continues to reduce its balance sheet, focusing on flexibility amid persisting inflation and employment risks.
- *Policy Decisions*: Two FOMC members, Waller and Bowman, dissented and opted for a rate reduction, citing growing risks to the labor market and the impact of tariffs on inflation.
- *Future Outlook*: The committee expects inflation to increase in the short term but emphasized uncertainty regarding the effects of tariffs. Economic growth has decelerated, and risks to financial stability are high due to asset prices and stablecoin expansion.

The minutes also highlighted the following:
- *Divisions within the Fed*: The committee is divided on the risks to inflation and the labor market, with some members favoring easier policy and others advocating for a wait-and-see approach.
- *Tariff Impact*: The committee noted that tariff effects are becoming more apparent in the data and expect near-term inflation to rise.
- *Rate Cuts*: Markets are pricing in potential rate cuts in September, with some analysts expecting two 25bps rate cuts before the end of the year.