Minutes from the Federal Reserve’s July 28-29 policy meeting, released Wednesday, indicate that policymakers grew more concerned about inflation during the session, with several participants warning that price pressures had become broad-based.
Three Fed officials dissented in favor of a quarter-percentage point rate increase, arguing that the central bank should adopt a more restrictive stance to meet its 2% inflation target and sustain maximum employment. The Federal Open Market Committee held the benchmark federal funds rate steady at 3.50%-3.75% during the meeting, as widely expected.
Minutes noted that "many" participants assessed that further tightening would likely be necessary if inflation failed to decline. Policymakers also emphasized that the primary tool for adjusting monetary policy should remain changes to the federal funds rate target range, rather than adjustments to the balance sheet, though a task force is reviewing balance sheet management.
Chairman Kevin Warsh sought input on reducing the number of Fed meetings from eight to six annually to allow more time for data accumulation, but no decision was made and the 2026 schedule remains unchanged. The next policy meetings are scheduled for September 15-16 and October 27-28, with rate-futures markets pricing in a higher probability of a hike in October.
The minutes also highlighted ongoing geopolitical risks, including constrained oil and gas shipments through the Strait of Hormuz amid the conflict involving Israel, Iran, and the Trump administration.
