Fed minutes: Officials deeply divided over future path of US inflation
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- Federal Reserve held its key rate at 3.6% at the June 16-17 meeting in a unanimous vote — the first set of minutes released under new Chair Kevin Warsh
- Fed forecasts split evenly: half of 18 policymakers backed a year-end rate hike while half favored holding steady, with one supporting a cut
- Kevin Warsh, appointed by President Trump earlier this year to replace Jerome Powell, declined to submit a forecast, arguing projections can lock policymakers into rigid approaches as conditions shift
- Fed officials warned the AI infrastructure buildout will keep upward pressure on prices for semiconductors, computer equipment, and electricity needed to power data centers
- Apple announced laptop and iPad price hikes last month, citing more expensive memory chips — illustrating how AI-driven costs are already reaching consumer goods
- New York Fed survey data showed one-year consumer inflation expectations climbing to 3.7% (near a three-year high) and three-year expectations hitting 3.3% (a four-year high)
- Jerome Powell remains on the Fed's policymaking committee as a governor until January 2028, even after his chair term ended in May
Why it matters: The unanimous June 17 decision to hold at 3.6% masks a 50-50 split among 18 policymakers on whether to hike by year-end. With consumer one-year inflation expectations at 3.7% and actual inflation hitting 4.2% in May after the US-Israel strike on Iran, rate cuts Trump has demanded are unlikely under Warsh's hawkish posture.
