Fed saw "upside risks" to inflation, disagreed on rate path

Federal Reserve officials released minutes from their June meeting that reveal significant disagreement over how to handle inflation. According to Axios, it was new chairman Kevin Warsh's first gathering of the policy committee, and members remain split over whether to raise, lower, or hold interest rates steady in coming months. The committee unanimously decided to leave rates unchanged last month, though a few officials pushed for an increase. But the minutes show a sharply divided group: some officials expect inflation to cool as energy prices fall and other pressures ease, while others worry that artificial intelligence demand, Middle East tensions, and tariffs will keep prices elevated. One faction sees rates possibly dropping this year; another thinks they should climb. By year-end, the committee is split between those who want rates at or below current levels and those who want them higher. Business contacts are reporting notable cost pressures, which supports the concern that inflation isn't finished. Warsh, notably, refused to offer his own inflation projection or signal where rates should head—consistent with his longtime criticism of the Fed's practice of offering forward guidance about future actions. The result: investors and borrowers face continued uncertainty about the Fed's path ahead.

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