Some US Fed officials considered rate hike on Iran war fallout, June meeting minutes reveal

Concerns over persistent inflation dominated discussions at the U.S. Federal Reserve's June 16–17 meeting, as policymakers adopted a leaner policy statement under Federal Reserve Chair Kevin Warsh while acknowledging that price pressures were becoming more widespread and could eventually require higher interest rates.

According to minutes released on Wednesday, a few officials believed there was a case for raising rates immediately.

However, the broader committee remained divided. Most participants saw a path for inflation to gradually return to the Fed's 2% target without further tightening, while many also acknowledged scenarios where inflation could remain elevated. Almost all officials agreed that additional rate hikes would be warranted if inflation failed to ease as expected.


"Participants generally assessed that information received over the inter-meeting period ⁠suggested that upside risks to price stability remained elevated while downside risks to achieving maximum employment had moderated a bit," the minutes said.

However, "all participants" supported holding rates steady finally.

As inflation hit almost double the Fed's target, "members concurred that the post-meeting statement would convey the (Federal Open Market) Committee's commitment to achieving its dual-mandate goals and emphasize that the Committee will deliver price stability," the minutes said.

The Fed officials also debated Warsh's proposal to end "forward guidance" and give out less commentary on upcoming rate decisions.

"A majority of participants remarked that they saw advantages in shortening the ⁠statement," the minutes said, while "most participants" supported removing language indicating the Fed's next policy move would likely be a rate cut.

The revised statement, adopted at the June meeting, removed all forward guidance on interest rates, reflecting Chair Kevin Warsh's preference to avoid signalling future policy actions in advance.

The Fed kept its benchmark interest rate unchanged at 3.50%-3.75% in June. However, updated projections pointed to a more hawkish outlook, with nine of the 18 policymakers expecting interest rates to be slightly higher by the end of 2026.