Fed Minutes Reveal a Divided Committee as Warsh Holds Firm on 2% Goal

Minutes from the Federal Reserve's mid-June policy meeting, released on July 8, revealed a sharply divided committee still weighing whether to raise interest rates again this year. Many participants judged that the appropriate level of the federal funds rate by the end of 2026 would be within or slightly below the current 3.50%-3.75% target range, while many others assessed it would need to be higher, and a few had seen a case for hiking at the June meeting itself. Officials broadly agreed that upside risks to inflation remained elevated, pointing to strong artificial-intelligence-related demand, the conflict in the Middle East and the effects of tariffs. Speaking the same week at the European Central Bank's forum in Portugal, new Fed Chair Kevin Warsh said inflation risks had eased somewhat in recent weeks but stressed that restoring inflation to the 2% target remains the central bank's primary goal. Warsh, who has scrapped traditional forward guidance and launched a review of how the Fed communicates, also defended the institution's independence from political pressure.