The Federal Reserve building in Washington, D.C., seen in November last year. [Reuters]
The Federal Reserve building in Washington, D.C., seen in November last year. [Reuters]

Some members of the Federal Reserve viewed inflation risks as more serious than before, according to minutes from the June Federal Open Market Committee meeting released Wednesday. A few officials said they saw grounds for raising the benchmark interest rate, citing factors including the fallout from the Middle East war. Ultimately, however, all participants agreed unanimously to hold the benchmark interest rate steady at 3.50–3.75 percent.

The minutes showed that while participants' concerns about the labor market had eased somewhat, their worries about inflation had grown.

"Participants generally assessed that upside risks to achieving price stability remained elevated, while downside risks to achieving maximum employment had eased somewhat," the minutes said, based on information received between meetings.

On recent supply shocks — including those related to the labor market and energy — the minutes noted that "a few participants said that, given these circumstances, there was a case for raising the target range for the federal funds rate." However, all participants, including those few, agreed to hold the benchmark interest rate steady.

Participants expected inflation to remain elevated in the near term before gradually declining as the effects of tariffs and higher energy prices fade. Most participants also said that continued strong demand for AI infrastructure was likely to sustain upward pressure on prices.

At the first meeting chaired by newly appointed Fed Chair Kevin Warsh, members broadly expressed support for changes to the Fed's communications approach that Warsh had proposed.

At his first FOMC meeting last month, Warsh cut the length of the post-meeting statement by more than half and removed the forward guidance that had previously been attached to it. A majority of participants judged that simplifying the statement had merit, and most agreed to drop language signaling the Fed's expected path for interest rates.


yckim6452@heraldcorp.com