Fed Concerned About Persistent Inflation Amid Rate Hold Decision

The minutes from the July 28-29 Federal Open Market Committee (FOMC) meeting revealed growing concerns among members about persistent inflation. Despite some members insisting that price pressures were up even after discounting Iran, tariffs, and other transitory factors, most participants anticipated that inflation would fall over the rest of 2026 as the effects of tariffs and earlier energy price increases wane.

However, many participants noted the possibility that inflation might be more persistently elevated. The staff review noted that near-term inflation compensation declined notably after the June FOMC meeting and moved up only marginally thereafter despite the sharp increase in oil prices.

Fed Chair Kevin Warsh proposed a reduced schedule of six FOMC meetings per year, beginning in 2027, which would allow more information to accumulate between meetings. The proposal was met with input from the Committee but no decisions were made regarding possible changes in the meeting schedule for 2026 or beyond.