Federal Reserve officials, meeting in Washington last month, concluded that the combination of low unemployment and still-elevated inflation meant they should delay cutting interest rates, at least for now.
Not all of them agreed, underscoring the challenge for Jerome H. Powell, the Fed’s chair, to forge a consensus across policymakers at forthcoming meetings.
A record of the central bank’s July 29-30 meeting, released on Wednesday, showed a divided Fed grappling with conflicting signals from the economic data, and how to respond to them.
Policymakers “generally expected inflation to increase in the near term,” the minutes showed, but they disagreed about whether that would be a short-term increase as companies passed along the cost of tariffs, or could morph into a more persistent problem. They agreed that job growth has slowed, but not about what that slowdown meant for the economy. Most important, they were divided about how to weigh the conflicting risks of higher inflation and rising joblessness.
“A majority of participants judged the upside risk to inflation as the greater of these two risks,” the minutes showed, “while several participants viewed the two risks as roughly balanced, and a couple of participants considered downside risk to employment the more salient risk.”
Ultimately, policymakers decided to hold rates steady for the fifth meeting in a row. But it was one of the most hotly contested monetary policy votes in decades, with two members of the Board of Governors officially opposing the decision to hold borrowing costs steady. It was the first double dissent on an interest rate vote from policymakers of that rank since 1993.
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The post Fed Officials Split Over How to Read Economic Signals appeared first on New York Times.
