Fed minutes show several officials favored July rate hike as inflation risks stayed elevated

Federal Reserve officials showed growing support for tighter monetary policy at their July meeting, with several participants favoring a 25 basis point rate increase and many warning that further tightening could be necessary if inflation remained elevated, according to minutes from the Fed’s July 28 and 29 meeting. The Federal Open Market Committee ultimately voted to keep the federal funds rate at 3.5% to 3.75%. Three members voted against the decision and preferred a 25 basis point increase. Officials generally agreed that economic activity continued to expand at a solid pace and labor market conditions remained stable, while inflation stayed above the Fed’s 2% target. Several participants who supported an increase said price pressures appeared broad based and argued for a more restrictive policy stance. Many participants said additional policy tightening would likely be necessary if inflation did not decline. Some also questioned whether financial conditions were restrictive enough to bring inflation back toward the Fed’s target. Inflation risks remained tilted to the upside, with officials pointing to the conflict in the Middle East, tariffs, energy prices, and demand from the...