Half of FOMC Members Back More Rate Hikes Amid Persistent Inflation

About half of Federal Reserve officials see the need for more interest rate hikes if inflation persists at its current level, according to the minutes of the July FOMC meeting. The central bank's 2% inflation target remains elusive as price pressures remain broad-based.

The Fed members who called for further tightening argued that debt-funded investment in artificial intelligence infrastructure is a new source of pressure on prices and financial markets. Some participants expressed concern about the impact of AI spending by big technology companies, warning that if earnings at these companies grow more slowly, stock prices could fall, data-center asset values could decline, and financial institutions could come under strain.

Three voting members dissented from the decision to hold rates steady in July and favored an increase. Fed Chair Kevin Warsh proposed reducing the committee's annual policy meetings to six from eight.