WASHINGTON–With its chairman under pressure from President Trump and others to cut rates, newly release minutes from its most recent meeting reveal officials at the Federal Reserve were split over the most likely trajectory for interest rates this year, but unanimous in keeping rates unchanged.
The minutes show opinions diverged over the economic impact of Trump’s policies and on how the Fed should respond.
The newly released record of the June meeting underscored the high degree of support among policymakers up until this point for the Fed to take its time before restarting interest rate cuts that it paused in January, noted the New York Times in its analysis.
‘Unanimously Endorsed’
Last month’s policy decision, which kept interest rates at 4.25% to 4.5%, was unanimously endorsed, the Times added.
“According to the minutes, the decision reflected a widely held view that the Fed was ‘well positioned to wait for more clarity on the outlook for inflation and economic activity’, given that the economy was still solid despite policy settings tuned to keep a lid on inflation,” the Times said.
The report further reveals that the discussion at the June gathering made clear that officials’ views have begun to splinter over the trajectory for interest rates in the coming months.
Additional Views
“The minutes noted that most policymakers thought ‘some reduction’ in interest rates would be appropriate on the basis that ‘upward pressure on inflation from tariffs may be temporary or modest, that medium- and longer-term inflation expectations had remained well anchored, or that some weakening of economic activity and labor market conditions could occur’,” the analysis summarized.
The minutes show a “couple” of policymakers indicated an openness to cut interest rates as soon as the next meeting in July, while another cohort thought the rates could stay on hold all year.”
“Their argument reflected concern that ‘upside risks to inflation remained meaningful’ as well as the possibility that the economy would remain ‘resilient’,” the Times stated.
What Minutes Also Show
The minutes further show:
- While most officials penciled in half a percentage point’s worth of cuts this year, nine of the 19 Fed policymakers forecast less than that.
- Seven officials thought the Fed should opt against any further reductions this year, while two predicted just one quarter-point move.
- Only two officials predicted that the central bank would cut by three-quarters of a percentage point this year.
