Some Fed officials made case for rate hike amid inflation concerns, minutes show
Investing.com — Federal Reserve officials expressed growing concern about elevated inflation at their June 16-17 meeting, with a few participants making a case for raising interest rates immediately, according to FOMC minutes released Wednesday.
The minutes showed that inflation remained a key concern for policymakers. All participants ultimately supported holding the benchmark interest rate steady in the 3.50%-3.75% range.
Most participants pointed to scenarios where inflation could remain elevated due to factors including AI-related demand, the Middle East conflict, or tariffs. Almost all of those participants indicated some policy firming would likely be warranted if inflation stayed high.
The broader debate appeared evenly divided. Most participants saw scenarios where inflation would fall toward the Fed’s 2% target on its own, while most also saw situations where it would remain elevated.
Participants generally assessed that upside risks to price stability remained elevated while downside risks to achieving maximum employment had moderated somewhat, the minutes said.
Fed staff raised their inflation forecast for 2026 and 2027 compared to the April projection, reflecting the Middle East war and effects of the AI buildout. The staff GDP growth outlook was slightly lower than the April forecast.
The meeting marked Chairman Kevin Warsh’s first as Fed chief. Policymakers also considered his proposal to end forward guidance and provide less commentary in the statement about future rate decisions.
A majority of participants saw advantages in shortening the policy statement. Most participants preferred not to repeat previous language suggesting an easing bias.
New projections from the June meeting showed nine of 18 policymakers expected rates to be slightly higher by the end of 2026.
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