At the Federal Reserve's meeting, several members spoke in favor of raising interest rates immediately amid concerns about high inflation, according to FOMC minutes released Wednesday.
The minutes showed that inflation remains the top concern for policymakers. Ultimately, all participants supported keeping the benchmark interest rate at 3.50%–3.75%.
Most participants pointed to scenarios in which inflation could remain elevated due to factors such as artificial intelligence-related demand, conflict in the Middle East, or tariffs. Nearly all noted that if inflation persists, monetary policy tightening would likely be necessary.
The overall discussion was roughly evenly divided. Most participants envisioned scenarios in which inflation would naturally decline to the Fed's 2% target, but just as many envisioned scenarios in which it would remain elevated. Participants generally assessed risks to price stability as remaining high, while risks to achieving maximum employment had moderated somewhat, according to the minutes.
Fed staff raised their inflation forecasts for 2026 and 2027 compared to their April estimates, reflecting the impact of the war in the Middle East and the effects of developing artificial intelligence infrastructure. The staff's GDP growth forecast was slightly lower than their April estimate.
The meeting was Chairman Kevin Warsh's first as head of the Fed. Policymakers also considered his proposal to abandon the practice of forward guidance and reduce the amount of commentary in the statement on future interest rate decisions.
Most participants saw advantages in shortening the policy statement. Most also preferred not to repeat previous language that indicated a bias toward easing policy.
New forecasts following the June meeting showed that nine of 18 policymakers expect a modest rate hike by the end of 2026.