Inflation Fears Have Intensified: What the Fed's "Minutes" Revealed

The U.S. Federal Reserve System (Fed) released the minutes of its July 28–29 meeting, in which the central bank left the benchmark interest rate unchanged for the fifth consecutive time. The document showed that “several” committee members were prepared to raise the rate, while “many” believed that tightening monetary policy would be necessary if U.S. inflation did not return to the 2% target. Concerns about inflation among officials at the regulator have intensified, Reuters reports.

At the Fed's most recent meeting last month, a number of Fed officials spoke in favor of raising interest rates, while "many" officials at the U.S. central bank acknowledged the need to tighten policy if inflation does not slow.

“Most [FED] participants expected inflation to decline over the remainder of the year as the effects of tariffs and earlier increases in energy prices faded,” the minutes state. However, “many participants [at the meeting] noted the possibility that inflation could remain elevated for a longer period.”

At the same time, the Fed officials’ forecasts regarding future inflation proved to be “extremely uncertain”—the outlook was also “overshadowed” by the resumption of the war with Iran.

As a result, in the statement issued at the end of the meeting—which was virtually identical to the one issued in June—regulatory officials reiterated their pledge to “ensure price stability” and described U.S. economic growth as “steady,” Bloomberg notes.

Reuters also notes that the minutes revealed that meeting participants discussed broader changes to the regulator’s operations, which are being promoted by the new head of the U.S. Federal Reserve, Kevin Warsh (the July Fed meeting was his second as head of the central bank). Specifically, according to the document, Warsh asked representatives of the Federal Open Market Committee (FOMC) for their opinion on changing the Fed’s meeting schedule and transitioning from eight meetings a year to six, which would allow for two full months of data accumulation between meetings. The minutes state that no decisions were made on this matter and that the meeting schedule for 2026 will remain unchanged.

Furthermore, the minutes make no mention of Fed officials supporting an interest rate cut, according to Reuters—a sign of just how much the discussion among the central bank’s officials has shifted over the past few months. The agency notes that 2026 began with expectations that the U.S. central bank—as inflation slows—might lower borrowing costs this year.

At its July 28–29 meeting, the Fed left the federal funds rate unchanged for the fifth consecutive time—at 3.5–3.75%. It is expected that at the upcoming meeting on September 15–16, borrowing costs will also remain at their current level. Traders estimate a 40.7% probability of a rate hike at the Fed’s meeting on October 27–28.

This article was AI-translated and verified by a human editor