The U.S. central bank’s decision to hold interest rates steady in June was unanimously supported, but officials were starting to splinter over the path forward.
Officials at the Federal Reserve were split over the most likely trajectory for interest rates this year as opinions diverged over the economic impact of President Trump’s policies, minutes from the central bank’s latest meeting showed.
The record of the June meeting, released on Wednesday, underscored the high degree of support among policymakers up until this point for the Fed to take its time before restarting interest rate cuts that it paused in January.
Last month’s policy decision, which kept interest rates at 4.25 percent to 4.5 percent, was unanimously endorsed. According to the minutes, the decision reflected a widely held view that the Fed was “well positioned to wait for more clarity on the outlook for inflation and economic activity” given that the economy was still solid despite policy settings tuned to keep a lid on inflation.
But the discussion at the June gathering made clear that officials’ views have begun to splinter over the trajectory for interest rates in the coming months.
The minutes noted that most policymakers thought “some reduction” in interest rates would be appropriate on the basis that “upward pressure on inflation from tariffs may be temporary or modest, that medium- and longer-term inflation expectations had remained well anchored, or that some weakening of economic activity and labor market conditions could occur.”
“A couple” of policymakers indicated an openness to cut interest rates as soon as the next meeting at the end of this month, while another cohort thought the rates could stay on hold all year. Their argument reflected concern that “upside risks to inflation remained meaningful” as well as the possibility that the economy would remain “resilient.”
