Key takeaways from the FOMC Minutes for the July 29–30, 2025 meeting:

• Economic Activity: Real GDP expanded modestly in H1 2025 after a Q1 contraction; growth in Q2 was driven by consumption and net exports, though investment slowed. Several participants expected subdued growth in H2. Housing demand showed weakness, while business investment was weighed down by policy uncertainty.

• Inflation: Headline PCE inflation was 2.5% YoY in June; core PCE was 2.7%. Tariffs have put upward pressure on goods prices, while services inflation slowed. Many participants noted uncertainty about the timing and persistence of tariff effects, though longer-term inflation expectations remained anchored.

• Labor Market: The unemployment rate stood at 4.1% in June, near maximum employment. Payroll gains were solid overall, though private sector hiring slowed. Some indicators suggested softer demand, including weaker wage gains and concentrated job growth, but participants emphasized stability in labor markets.

• Monetary Policy Outlook: The Committee kept the federal funds rate at 4.25–4.50%. Almost all participants supported no change, citing inflation still above target; two members dissented in favor of a -25 bps cut, arguing that excluding tariffs, inflation is near 2% and growth has slowed. Policy remains data-dependent with attention to tariffs’ effects.

• Risks and Financial Stability: Upside risks to inflation and downside risks to employment both seen as elevated, with the majority viewing inflation risks as greater. Participants flagged asset valuation pressures, tariff uncertainty, and vulnerabilities in nonbank finance and stablecoins. The Committee stressed the need to keep inflation expectations anchored amid tariff-related shocks.

• Bowman and Waller's dissents did not include a weak labor market which suggests they might actually be in favor of a 50 bps cut in September given the bad July employment data.