WASHINGTON–Minutes from the Federal Reserve’s most recent meeting make clear just how wedded Fed officials are to their wait-and-see approach when it comes to adjusting rates amid strong uncertainties about the economic outlook.
The release of the Minutes comes at the same time it was learned President Trump met with Fed Chairman Jerome Powell on Thursday. Trump has been publicly pressuring Powell to cut interest rates.
“At the President’s invitation, Chair Powell met with the President today at the White House to discuss economic developments including for growth, employment, and inflation,” the Fed said in a statement. “Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook.”
White House spokesperson Karoline Leavitt said after the meeting was disclosed, “The president did say that he believes the Fed chair is making a mistake by not lowering interest rates, which is putting us at an economic disadvantage to China and other countries and the president’s been very vocal about that, both publicly and now I can reveal privately as well.”
On May 17, in a post on Truth Social, Trump wrote, “THE CONSENSUS OF ALMOST EVERYBODY IS THAT, “THE FED SHOULD CUT RATES SOONER, RATHER THAN LATER.” Too Late Powell, a man legendary for being Too Late, will probably blow it again – But who knows???”
This was the first meeting since Trump began his second term.
What Minutes Show
Meanwhile, a record of the Fed’s May 6-7 meeting show there was strong support for holding off on any rate cuts until there is more clarity around how President Trump’s policies and tariffs are affecting the economy.
“Participants agreed that with economic growth and the labor market still solid and current monetary policy moderately restrictive, the Committee was well positioned to wait for more clarity on the outlooks for inflation and economic activity,” the Minutes state.
‘Unusually Elevated’
The Minutes further show uncertainty about the outlook had become “unusually elevated,” officials said, “making it appropriate to take a cautious approach until the net economic effects of the array of changes to government policies become clearer.”
The meeting concluded just as tariff increases at that point had been “significantly larger and broader than they had anticipated,” according to the Minutes.
‘Difficult Trade-Offs’
The Minutes further indicated that officials discussed the possibility of “difficult trade-offs if inflation proves to be more persistent while the outlooks for growth and employment weaken.”
Some Fed officials expressed concern that expectations about inflation over a longer time horizon could begin to “drift upward, which could put additional upward pressure on inflation,” the Minutes indicate.