The minutes of the last meeting of the Federal Open Market Committee (FOMC) of the Federal Reserve of the United States (Fed) show that "many" participants consider it "necessary" for the U.S. central bank to carry out a future increase in interest rates in case inflation does not decrease.
In the document of the meeting held on July 29, in which the monetary authority chose to keep the benchmark rate unchanged, it is noted that "some participants commented that current financial conditions may not be restrictive enough to facilitate a return of inflation to 2%."
Despite this, the majority of FOMC members leaned towards maintaining the current range, understanding that the information that would accumulate between meetings "could provide greater clarity" and "reduce uncertainty about inflation prospects."
The analysis of price developments presented by several officials emphasized that increases in services and basic goods remained high and that, even excluding products most exposed to the effects of the conflict in the Middle East and tariffs, core inflation continued at high levels.
According to the minutes, "participants considered that their inflation outlooks were very uncertain and that inflationary risks were tilted to the upside. Many participants pointed out that the recent escalation of the conflict in the Middle East significantly overshadowed inflation prospects. These participants commented that a prolonged conflict could extend supply chain issues and put upward pressure on inflation."
The Federal Reserve decided a few weeks ago to keep interest rates within the target range of 3.50% to 3.75%, in line with the consensus forecasts of analysts, thus chaining five consecutive meetings without changes in the benchmark rate, which has been stable since January.
However, unlike the meeting held in June, the governing body of the U.S. central bank did not reach unanimity this time, but approved the decision by nine votes in favor and three against, the latter in favor of raising the cost of money by a quarter point, something that is reflected in the deliberations recorded in the minutes.
Fewer monetary policy meetings
In parallel, the president of the Fed, Kevin Warsh, expressed his preference for reducing the frequency of monetary policy meetings to six meetings a year, with a bimonthly periodicity, compared to the eight currently contemplated in the 2026 calendar.
The so-called 'guardian of the dollar' argued that decreasing the number of meetings "would allow for more information to be accumulated between meetings than with the current practice and would give policymakers and staff more time to analyze strategic monetary policy issues," after several participants pointed out that financial and economic conditions had hardly changed since the previous meeting.
Thus, Warsh asked the FOMC to weigh in on this proposal, without any resolution having been adopted on the matter yet, which in any case would not alter the current calendar.