While the possibility of job losses has officials with the Federal Reserve concerned, most of them appear to be more worried about the threat of higher inflation, minutes of the Fed’s most recent meeting show.
That concern for potentially higher inflation appears to be what led the Fed’s governing committee to keep its rates steady.
The Associated Press is reorting that, according to the minutes of the July 29-30 meeting released Wednesday, members of the committee “assessed that the effects of higher tariffs had become more apparent in the prices of some goods but that their overall effects on economic activity and inflation remained to be seen.”
The minutes show the majority of the 19 policymakers want a better understanding of the potential impact of President Donald Trump’s tariffs on inflation before they consider lowering interest rate.
Inflation has crept up in the past couple of months, though not as much as economists had feared when Trump first revealed his tariff plan back in April.
The Fed left its key interest rate unchanged last month at about 4.3%, though two members of its governing board dissented in favor of a rate cut. Both members — Christopher Waller and Michelle Bowman — were appointed to the board during Trump’s first term, according to the AP report.
At a news conference after the meeting, Chair Jerome Powell signaled that it might take significant additional time for the Fed to determine whether Trump’s sweeping tariffs are boosting inflation.
The Fed typically keeps its rate high, or raises it, to cool borrowing and spending and combat inflation. It often cuts its rate to bolster the economy and hiring when growth is cooling.
