The November FOMC minutes revealed a Committee firmly committed to a gradual, methodical approach to monetary policy easing.
All participants backed the 25 basis-point cut to 4.50% 4.75%, but what’s particularly interesting was their repeated emphasis that policy decisions were “not on a preset course.” The Fed seems determined to avoid any market assumptions about a predetermined path of rate cuts.
The Committee detailed uncertainties about the neutral rate of interest and the importance of looking past volatile monthly data to focus on underlying economic trends as reasons for taking a cautious stance.
They’re essentially walking a tightrope – trying to balance the risks between easing too quickly, which could derail their progress on inflation, and moving too slowly, which might unnecessarily hamper economic activity.
Link to FOMC Meeting Minutes (November 2024)
What’s particularly noteworthy is how JPow and his gang positioned themselves for various scenarios.
Some members noted they could pause the easing cycle if inflation proved sticky, while others mentioned the possibility of accelerating cuts if the labor market took a turn for the worse.
But the overarching message was clear – no predetermined path, no automatic moves, just careful analysis of the data as it comes in.
Looking ahead, traders can expect the Fed to maintain this deliberate approach.
The minutes indicated that if the data evolves as expected, with inflation continuing its path toward 2% and the economy maintaining its strength, the Committee would favor moving gradually toward a more neutral stance. However, they’ve kept their options wide open, ready to adjust course if economic conditions warrant a change in strategy.
Market Reactions
U.S. Dollar vs. Major Currencies: 5-min
Overlay of USD vs. Major Currencies Chart by TradingView
The dollar’s reaction to the FOMC meeting minutes was muted, signaling that markets had likely already priced in the Fed’s measured approach to easing.
Earlier in the day, the greenback was propped up by risk-off sentiment and worries about Trump’s potential tariffs, but it started to slip just before the London session wrapped up.
Even with the Fed favoring a gradual pace of easing, the minutes didn’t do much to shake expectations for a December rate cut. Add to that some likely profit-taking ahead of the U.S. core PCE price index release and the Thanksgiving holidays, and you’ve got more reasons for the late-day dip in the dollar.
By the end of the session, USD held onto gains against most major currencies, though it struggled to keep up with the yen’s relative strength.