Fed minutes show inflation risk guides policy

Most Fed officials saw inflation risks as a greater concern than job losses, keeping rates unchanged amid tariff effects and uncertainty.

Fed minutes show inflation risk guides policy as tariffs loom

The minutes from the July 29-30 Federal Reserve meeting show a majority of policymakers judged the threat of higher inflation to be greater than the risk of weaker hiring. They noted that higher tariffs had become more visible in prices for some goods, but their overall impact on inflation and activity remained unclear. The group also stressed uncertainty about how, when, and to what extent tariffs would influence the economy. The Fed left the target rate steady at about 4.3 percent, even as two policymakers wanted a rate cut and others favored waiting for clearer signals.

The document highlights a cautious, data-driven approach in a politically tense environment. The Fed aims to protect inflation credibility while avoiding new shocks to growth. That tension matters because tariff changes can creep into prices gradually, complicating expectations and market pricing. The real test will come with incoming data that either confirms inflation pressures or eases them, shaping whether the Fed will cut later this year or hold firm.

Highlights

The next data releases will set the tempo for policy moves.