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Dow Jones NewsAug 20, 6:37 PM UTC
MW Fed officials see inflation just around the corner - and think consumers will bear the burden, minutes show
By Greg Robb
A 'few' officials see 'stubbornly elevated inflation'
Federal Reserve Chair Jerome Powell speaks during a news conference in July after his colleagues voted 9-2 to keep interest rates unchanged for the fifth straight meeting.
Federal Reserve officials believe inflation from new tariffs is just around the corner, and that American consumers are going to pay the costs, minutes of the Fed's July meeting show.
"With regard to the outlook for inflation, participants generally expected inflation to increase in the near term," officials said.
While there are several theories on why inflation has not risen sharply during the initial rise in tariffs, Fed officials think the higher costs will eventually hit domestic businesses and said their contacts tell them that many firms would "have to" pass through the costs to their customers.
At the July meeting, there was a rare dissent from two top Fed officials in favor of a rate cut.
But the minutes don't show much support from other Fed officials for such a quick move or any hidden groundswell of support for a cut in September.
Only "some" officials pushed the Fed to ease before they had complete clarity on the effects of tariffs.
Indeed, a "few" Fed officials expressed heightened worries about inflation.
Many economists think that the higher inflation from tariffs won't persist.
But these Fed officials argued that "tariff-related factors, including supply chain disruptions, could lead to stubbornly elevated inflation."
Most Fed officials simply said they hoped to learn more in coming months from incoming data about the appropriate setting of rates.
Ahead of their release, economists thought these July minutes were "stale" because of the weak labor market report that was released only two days after the Fed meeting.
The July data showed a weaker labor market, including unusual steep downward revisions to job growth to prior months. President Trump quickly fired the head of the Bureau of Labor Statistics after the release.
Traders in derivative markets sharply raised their expectations for a September rate cut after the weak July employment report.
All eyes will be on Fed Chair Jerome Powell on Friday when he discusses the economic outlook from the Fed's annual summer retreat in Jackson Hole. Economists will be looking to see if he "pushes back" on market expectations of a reduction in borrowing costs in September.
-Greg Robb
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08-20-25 1437ET
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