Most Fed officials see rate hikes if inflation stays high, minutes show

The Fed kept interest rates steady, but disagreement centered on wording in the policy statement about the direction of the next move. Four voting officials dissented, with three preferring language that framed the next action as potentially either a cut or a hike. Minutes indicated that some participants expected policy tightening if inflation stayed persistently above 2 percent, but the minutes did not specify how long inflation would need to remain sticky before supporting a rate increase. War-related energy and commodity price increases raised uncertainty about spillovers into broader inflation. Some participants said rate cuts later in the year could be warranted if conflict resolution and tariff and energy effects fade. Others warned that sustained elevated energy prices and tariffs could embed inflation pressures and de-anchor inflation expectations. Many officials emphasized the importance of addressing cybersecurity.

"The war has caused energy prices and costs of other affected commodities to soar in recent months, with economists unsure about how those price pressures might spill over into other parts of the economy. That question is at the heart of what the Fed does next, as it is about to be led by Warsh, who has supported rate cuts. The late April policy meeting was expected to be the last for Jerome Powell as Fed chair."

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