Fed minutes bolster market expectations for a September rate cut

Oil market analysts got another reassurance of a potential US interest rate cut in September, after the US Federal Reserve (Fed) released official minutes from its July meeting.

PHOTO: US Fed headquarters. Getty Images

Minutes from the Fed’s July meeting released yesterday showed that a “vast majority” of Fed officials want to cut rates at the September meeting, VANDA Insights’ founder and analyst Vandana Hari said.

Lower interest rates can support demand growth, making dollar-denominated commodities like oil more affordable for holders of other currencies.

Moreover, the US Bureau of Labor Statistics (BLS) revised the July employment report, showing a weaker-than-expected US job market. US employers added 818,000 fewer jobs in the 12 months leading up to March 2024 than initially estimated, according to a Reuters report.

This sharp downward revision in US job numbers has heightened concerns about the nation’s economic health and reinforced expectations that the Fed might soon start cutting interest rates to support the economy.

The US Fed is currently preparing for its interest rate policy meeting on 17 and 18 September, where an initial rate cut is widely anticipated. The Fed has kept its benchmark interest rate within the 5.25-5.50% range for over a year.

By Aparupa Mazumder

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