Some Fed officials saw a case to cut rates in July, minutes show

• Several Fed officials saw a "plausible case" to cut interest rates in July, according to minutes released on Wednesday.
• They cited disinflation and rising unemployment.
• Meanwhile, a majority of officials considered it appropriate to loosen rates in September.

A number of Federal Reserve officials saw a case to reduce interest rates immediately in July, according to minutes released on Wednesday from that month's policy meeting.

While each participant ultimately supported the decision to keep the federal funds rate unchanged at 5.25%-5.50%, several observed that falling inflation and rising unemployment made a "plausible case" for a 25-basis-point rate cut in July.

Still, the majority concluded it would be most appropriate to loosen policy at the upcoming Fed meeting in September, as long as economic data continued to come in as expected. The central bank lowers rates to ensure it doesn't unnecessarily restrict growth.

"Many participants commented that monetary policy continued to be restrictive, although they expressed a range of views about the degree of restrictiveness, and a few participants noted that ongoing disinflation, with no change in the nominal target range for the policy rate, by itself results in a tightening in monetary policy," the minutes said.

The Fed's decision that month to keep interest rates steady proved itself consequential, as it was soon followed by a weaker-than-expected jobs report in early August.

The data triggered fears that interest rates were, in fact, too high, pulling the economy into recessionary territory. According to July's minutes, officials were concerned about easing labor market conditions prior to the report, with some noting slipping data prints could "transition to a more serious deterioration."

The report briefly sparked expectations for an emergency rate cut, or at least for a deeper interest rate reduction in September. However, concern eased through the rest of this month, as jobless claims fell back to a five-week low .

With the Fed's next meeting scheduled to start September 17, virtually no one expects interest rates to stay unchanged. Instead, futures markets indicate a 61.5% chance of a 25-basis point cut that month, before policy is further reduced later in the year.