The Fed released their minutes from their June meeting. The statement shows the voting members are split on whether inflation will abate once the war in the Middle East is settled. “Many” of the officials say the federal funds rate will remain unchanged, or slightly below, its current level of 3.50 to 3.75 percent by the end of the year. But “many” believe rates will go up in 2026. Forecasts say the Fed is evenly split.
Inflation is the FOMC’s primary concern. It was hoped that once gas prices fall and the effects of the tariffs worked their way through the economy, inflation would fall. But now the worry is that the massive investment in AI will be driving up prices for technology and electricity.
During a news conference in June, newly appointed Fed Chair Warsh said inflation will return to the 2 percent target, however, it has not been that low for five years. Warsh’s statement has led economists to believe rate hikes are possible later this year. The Fed meets again on July 28-29, they will skip August and reconvene September 15-16.