Catenaa, Thursday, August 21, 2025- Most US Federal Reserve officials highlighted inflation risks as outweighing concerns over the labor market at their meeting last month.
Officials acknowledged worries over higher inflation and weaker employment, but a majority of the 18 policymakers in attendance “judged the upside risk to inflation as the greater of these two risks,” according to the minutes of the Federal Open Market Committee’s July 29-30 meeting.
Policymakers left interest rates unchanged in a range of 4.25% to 4.5% last month, citing elevated uncertainty in their outlook as economic activity moderated during the first half of the year.
Their statement at the time characterized the labor market as “solid” but said inflation remained “somewhat elevated.”
Several said they saw the risks to their dual mandate as roughly balanced, the minutes showed, while a couple said they were more concerned about the labor market.
Though the minutes don’t identify policymakers by name, Governors Christopher Waller and Michelle Bowman voted against the decision, pointing to a weakening job market.
In his press conference following the meeting, Chair Jerome Powell said the inflationary impact from tariffs could well be temporary, but the central bank needed to guard against a more persistent effect.
Committee members debated whether tariffs would generate a one-time price impact or a more lasting inflation shock.
“Several participants emphasized that inflation had exceeded 2% for an extended period and that this experience increased the risk of longer-term inflation expectations becoming unanchored in the event of drawn-out effects of higher tariffs on inflation,” the minutes said.
The biggest spike in wholesale inflation in three years provided the latest sign that companies have begun to raise prices to offset rising input costs. Some Fed officials have voiced concerns that the levies will influence prices well into next year.
