Minutes from the US Federal Reserve's June 17-18 meeting revealed a clear division among monetary policymakers regarding the timing and extent of an interest rate cut, amid differing assessments of the impact of the Trump administration's tariffs against indications of a slowing labor market and continued economic strength.
Although members voted unanimously to hold the benchmark interest rate at 4.25%–4.5%, most participants indicated that a gradual rate cut throughout the year might be appropriate, considering that inflationary pressures from tariffs are "temporary and limited," while growth and employment may decline later.
However, disagreement was evident regarding the speed of action, with "a few" members believing the first cut could occur at the July meeting, while "some" believed no reduction was needed this year. Conversely, "several" officials cautioned that the current rate may be close to neutral, meaning there is limited scope for further cuts, especially with inflation remaining above the 2% target.