Fed Inflation Worries Grew at June Meeting, Minutes Show
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- Fed June 16-17 meeting minutes showed concern about high inflation mounting, with 'a few participants' seeing a case to raise rates at that meeting — even as the FOMC held the benchmark rate at 3.50%-3.75%
- Policymakers were evenly divided, with 'most participants' seeing inflation falling to the 2% target on its own, but 'almost all' of those expecting persistent inflation considering a rate increase necessary
- Several participants flagged that price pressures had become more broad-based across transportation, air fares, petrochemical products, and agricultural inputs, with new concerns raised about the inflationary impact of AI investments
- June forecasts showed nine of 18 policymakers seeing rates slightly higher by the end of 2026, and there was no mention of support for an immediate rate cut — a contrast with the April meeting where Stephen Miran advocated for cuts
- Warsh led the move to strip all forward guidance from the policy statement; a majority supported shortening the statement, and the minutes themselves came in about 1,000 words (20%) shorter than the prior format
- Market reaction was muted, but interest-rate futures maintained bets that the FOMC will deliver a rate hike by its September 15-16 meeting
Why it matters: By dropping all forward guidance from its statement, the Fed has removed its own policy anchors, leaving markets dependent on incoming data and Fed-speak for direction. With nine of 18 policymakers already seeing rates higher by year-end and futures pricing a September hike, the committee's split verdict means the next data print — not the statement — will dictate the next move.
