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Home Economy

Despite Fed vote to keep rates steady, FOMC minutes show divide

July 8, 2026
Reading Time: 2 mins read
Second Circuit rules Federal Reserve Act does not require Federal Reserve Banks to grant master account

Federal Reserve officials seemed to be divided over interest rates, according to minutes released today from the Federal Open Market Committee June 16-17 meeting.

The gathering was Fed Chair Kevin Warsh’s inaugural FOMC meeting. Some participants argued for a hike in rates, while the broader committee was divided between holding rates steady and further tightening.

In the end, the committee voted unanimously to maintain the target range for the federal funds rate at 3.5%-3.75%.

“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” according to the minutes. “Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated relative to the committee’s 2% goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The committee will deliver price stability.”

Most committee participants highlighted scenarios in which inflationary pressures would dissipate and inflation would soon begin to return to 2%. As such, almost all of these participants noted that it would likely be appropriate to maintain or eventually lower the target range for the federal funds rate, according to the minutes.

Many participants, however, also identified scenarios in which under the context of stable labor market conditions, inflation would remain elevated due to strong AI-related demand, the conflict in the Middle East, or the effects of tariffs. In such scenarios, almost all of these participants indicated that some policy firming would likely be warranted to return inflation to 2%.

Other participants indicated that the appropriate level of the federal funds rate would be within or slightly below the current target range at the end of this year. Many other participants, however, assessed that the appropriate level of the federal funds rate would be above the current target range at the end of this year. Participants noted that their future policy actions would depend on incoming information.

Note on FOMC communications

The meeting also marked a change in how the Fed communicates following FOMC meetings. The committee moved to strip out wording that had pointed toward future rate cuts, and the resulting statement (which was cut to about a third of its typical length) reflected officials’ preference for more concise public messaging.

Tags: Federal ReserveFOMCInterest rates
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