Overview
- The Fed left the federal funds rate at 3.50%–3.75% but the June 16–17 minutes, released Wednesday, show committee members split between scenarios that would justify cuts and others that would require more tightening.
- A small number of participants said there was already a case for raising rates at the meeting, though all supported holding for now.
- Officials identified specific upside inflation risks from strong AI-driven demand, renewed Middle East energy shocks, and tariffs that could keep price growth above the Fed’s 2% target.
- Warsh shortened the post‑meeting statement, removed language signaling an easing bias, declined to offer his own rate projection, and launched five task forces to overhaul communications and other practices.
- Markets and prediction markets quickly repriced the outlook, pushing the probability of at least one 2026 hike materially higher, and investors will watch upcoming inflation data and Warsh’s testimony for signs of a policy shift.