FOMC minutes of the July 28–29 meeting — Warsh’s second as chair — show a Committee that as of that time was continuing to move in a more hawkish direction The talk about potential rate cuts vanished replaced by hopes for softer inflation but acknowledgement of hikes in the alternative, while the hike camp became more vocal.
“Several participants favored an increase of 25 basis points in the target range at this meeting…. Many participants assessed that policy tightening would likely be necessary if inflation did not decline,” and “some” questioned whether financial conditions are currently restrictive enough to get inflation back to 2%.
“Several” and “some” participants expressed concerns about the breadth of inflation.
AI moved from an inflation footnote to an open argument (and a potential financial stability concern), while the labor market was described as stable and modestly firming — a characterization the July data has since somewhat undercut.
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