Fed minutes reveal split among officials on inflation outlook and rate path

The Federal Reserve’s policy committee remains divided on the future trajectory of inflation, according to minutes released Wednesday. While many of the 19 officials expect the benchmark rate to stay at or near the current 3.6% through the end of the year, an equal number anticipate a higher level by that time.

Projections submitted after the June 17 meeting indicated that half of the 18 policymakers who voted supported a rate increase by year-end, while the other half favored keeping rates unchanged or lowering them. New chair Kevin Warsh did not submit a forecast, saying such projections could lock the Fed into a specific course if economic conditions shift.

The minutes highlighted concerns that inflation could remain elevated due to strong demand for artificial-intelligence infrastructure, which may push up prices for semiconductors, computer equipment and electricity. > "Many participants noted that ongoing strong demand for AI infrastructure would likely sustain upward pressure on prices for technology products and electricity," the document said.

Officials also noted that inflation is expected to decline as gasoline prices fall and tariff effects wane, but they remain wary of consumer expectations. A New York Fed survey showed one-year inflation expectations rising to 3.7%, the highest in nearly three years, while three-year expectations rose to 3.3%, a four-year high.

The committee voted unanimously to keep rates unchanged at the June meeting, though a few members indicated there was “a case for raising” rates. Warsh, appointed by President Donald Trump earlier this year, reiterated at a June 17 news conference that the Fed aims to bring inflation back to its 2% target, a goal it has not met for more than five years.