The Fed tightening outlook remained conditional on inflation’s path, with many Federal Reserve officials judging that further policy restraint would probably be needed if price pressures failed to recede, according to minutes of the July 28-29 meeting released Wednesday.
The Federal Open Market Committee left its target range unchanged at 3.50% to 3.75%. The decision passed on a 9-3 vote, with Beth Hammack, Neel Kashkari and Lorie Logan favoring a quarter-point increase, the minutes showed.
Some participants said financial conditions might not be restrictive enough to return inflation to the Fed’s 2% objective. Others noted that conditions had tightened between meetings, partly reflecting solid economic growth and expectations for a more restrictive policy stance.
Most officials expected inflation to moderate later this year as the effects of tariffs and prior energy-price increases fade. Still, many warned that inflation could prove more persistent. The minutes cited uncertainty surrounding the Middle East conflict, including risks of supply-chain disruptions and renewed upward pressure on prices.
Officials also expressed concern that an extended period of above-target inflation could influence households’ and businesses’ expectations, as well as wage- and price-setting behavior. The committee said incoming information would remain central to its policy deliberations. The Fed’s July policy statement and the meeting minutes provide the official account of the decision.
