FOMC Minutes Show Fed Would Consider Rate Hikes if Inflation Stays Above Target

The Federal Reserve indicated it would consider additional interest-rate increases if inflation pressures persist, underscoring a more hawkish tilt within the central bank.

Minutes released on May 20 from the Federal Open Market Committee's policy meeting three weeks earlier showed the Fed left its benchmark rate unchanged at 3.5% to 3.75%.

Officials said they weighed inflation pressures stemming from higher energy prices and uncertainty over the Middle East even as the economy continued to expand.

Eight committee members, including Chair Jerome Powell, voted in favor of the decision.

Stephen Miran argued for a rate cut, the minutes showed.

Beth Hammack, Neel Kashkari and Lorie Logan opposed the inclusion of dovish language in the statement.

Most Fed officials said the central bank should consider raising rates if inflation continues to run above its 2% target.

Many also said the Fed needed to signal to markets that its next policy move could be a rate increase rather than a continuation of its previous easing bias.

Expectations for rate cuts this year have faded rapidly amid a sharp rise in oil prices and higher Treasury yields.

Markets are now focused on how the Fed's more hawkish stance could ripple through US stocks and global financial markets.