Divided Fed Flags Risks on Tariffs, Inflation, and Jobs in July Minutes

Washington — Federal Reserve officials remained split over the path of interest rates at their July meeting, with minutes released Wednesday highlighting tensions between concerns about inflation and signs of a weakening labor market.

The Federal Open Market Committee (FOMC) voted to keep its benchmark rate steady at 4.25%-4.5%, though two governors, Christopher Waller and Michelle Bowman, dissented in favor of cuts. It marked the first time in more than three decades that multiple Fed governors opposed a rate decision.

The minutes showed officials wrestling with the potential impact of President Donald Trump’s tariffs, which policymakers warned could fuel inflation while adding uncertainty for businesses and consumers. “Participants generally pointed to risks to both sides of the Committee’s dual mandate, emphasizing upside risk to inflation and downside risk to employment,” the summary said.

While most members saw inflation as the greater threat, others flagged weakening job growth and consumer spending as early warning signs. The debate comes just ahead of Chair Jerome Powell’s keynote address at the Fed’s annual Jackson Hole symposium, where markets are watching closely for signals on future policy.