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Fed Minutes Show Unanimous Support to Hold Rates, Cite AI, Middle East and Tariff Inflation Risks
Summary
- All meeting participants supported holding the benchmark interest rate unchanged, while some also mentioned the need for a rate hike.
- Most participants said AI-related demand, the Middle East conflict and tariffs could stoke inflation.
- Almost all participants said further policy tightening may be needed if inflation remains elevated.
Forecast Trend Report by Period
All participants at the Federal Reserve's latest meeting supported leaving interest rates unchanged, while expressing concern that expanded investment in artificial intelligence, geopolitical risks in the Middle East and tariffs could fuel inflation.
Minutes released by the Fed on July 8 showed participants unanimously agreed to maintain the current target range for the benchmark interest rate. Some participants raised the possibility that a rate increase could be needed, but backed holding rates steady at this meeting.
Most participants also assessed that inflation could remain higher than expected because of AI-related demand, the conflict in the Middle East and tariffs.
Almost all participants said additional policy tightening could be needed if price pressures persist.
JH Kim
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