The Fed is willing to ease inflation even if it means completely slowing down the economy. Just like everybody else, you may have just asked “But isn’t the economy on the brink of a recession?” Well, yes, but this is their job, so we let it play out.

It has been rumored that the July Fed meeting would be witnessing another 50-75bps added to the 75bps approved last month.

“In discussing potential policy actions at upcoming meetings, participants continued to anticipate that ongoing increases in the target range for the federal funds rate would be appropriate to achieve the Committee’s objectives. In particular, participants judged that an increase of 50 or 75 basis points would likely be appropriate at the next meeting.”

The minutes meeting said.

The meeting also disclosed its knowledge of the effects tightening the economy would have as the summary stated, “Participants recognized that policy firming could slow the pace of economic growth for a time, but they saw the return of inflation to 2 percent as critical to achieving maximum employment on a sustained basis.”

As mentioned, it is being rumored that the Fed officials are saying they need to make a big move to ensure markets and the public are serious about the fight against inflation. The document released from the Minute meeting stated that communication regarding the stance of policy, “would be essential in restoring price stability.“

The move will ultimately come at a time of economic uncertainty for the United States. GDP in Q1 fell nearly 1.6% and the Q2 figures are pacing to show a decline of 2.1%. In a technical stance, this would register the situation as a recession.

“Since the last meeting, economic conditions have weakened as financial conditions have tightened. What markets want to hear now, is what the Fed has in mind if economic data releases continue to signal a deeper more serious downturn without a commensurate easing in inflation.”

Quincy Krosby, the chief equity strategist at LPL Financial, said.

There has been noted of consumer sales slowing and businesses holding back on investments due to rising costs, the war in Ukraine, Covid lockdowns continuing in China, and the supply chain struggle that has been persistent for what seems like years now. The previous PCE estimate was 4.3% while new estimates say the PCE will jump to 5.2%. Depending on how you view the situation, this is worse than the previous estimate but compared to the PCE 12-month estimate, May was stated to finish at 6.3%.

Ultimately, the minutes noted that the rate hikes will position the Fed to evaluate and make successful decisions before whether or not to keep going at the rate they are of fending off inflation. If inflation does fail to come down, it was stated the Fed will take a “more restrictive policy.”