Officials at the U.S. Federal Reserve remain worried about the labor market, inflation, and the impacts of tariffs, according to minutes from the central bank’s July meeting.
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Perhaps most important, Fed officials agreed at their most recent meeting that it is too soon to lower U.S. interest rates. That said, the minutes show that two Federal Reserve governors dissented from the majority consensus and argued in favor of cutting interest rates in July.
“Participants generally pointed to risks to both sides of the Committee’s dual mandate, emphasizing upside risk to inflation and downside risk to employment,” read the meeting minutes. While “a majority of participants judged the upside risk to inflation as the greater of these two risks,” a couple saw “downside risk to employment as the more salient risk.”
Dissenters
Federal Reserve Governors Christopher Waller and Michelle Bowman voted against the decision to hold interest rates steady, preferring instead that the central bank begin cutting its key Federal Funds Rate. That rate, which is used as a benchmark for consumer interest rates, has been in its current target range of 4.25% to 4.50% since December 2024.
The July meeting marked the first time that multiple Fed governors voted against a consensus decision on interest rates in more than 30 years. Tariffs, and their impact on the U.S. economy, remain a main concern of the Federal Reserve. “Regarding upside risks to inflation, participants pointed to the uncertain effects of tariffs and the possibility of inflation expectations becoming unanchored,” read the minutes.
The meeting notes were released two days before Fed Chair Jerome Powell delivers a keynote address at the central bank’s symposium in Jackson Hole, Wyoming. Powell is widely expected to use the speech to indicate the short-term direction for the Fed regarding interest rates. The minutes are also being released as U.S. President Donald Trump steps up his attacks on the central bank and demands rate cuts.
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