Recently released minutes from the Federal Reserve’s July meeting confirm that officials favoring a tough stance on inflation remain in control, opting to hold interest rates steady as they monitor the economic impact of tariffs.
Hawkish Stance Fueled By Greater Inflation Risks?
A majority of the committee’s participants judged that the upside risk to inflation was the greater of its two primary risks.
This hawkish position comes as external pressures from trade policy continue to complicate the economic outlook. According to one analyst, tariffs are a primary factor keeping inflation a top-tier concern for the central bank.
“Inflation remains on the front burner for Fed officials as tariffs still pose a risk to the economy and a pickup in inflation,” said Eric Teal, Chief Investment Officer for Comerica Wealth Management.
Teal noted that the effective tariff rate on imports rose to about 16% in August. This sentiment is mirrored in the Fed’s internal discussion, where participants observed that “disinflation appeared to have stalled, with tariffs putting upward pressure …