The minutes from the June meeting of the U.S. Federal Reserve released on Wednesday revealed that policymakers were divided over the decision to pause interest rates, with some arguing that rates should rise as inflation remains elevated.
According to minutes, the majority of Fed officers at their June meeting indicated more tightening is expected, albeit at a slower pace than the rapid-fire rate rises that had dominated monetary policy since early 2022.
Even while most members expected additional rate hikes to come, they decided to vote against raising rates due to worries over economic growth. After implementing 10 consecutive rate increases, they deemed it acceptable to forego the June meeting due to the policy’s delayed effects and other concerns.
The unanimous decision not to raise rates came in “consideration of the significant cumulative tightening in the stance of monetary policy and the lags with which policy affects economic activity and inflation,” according to the minutes released Wednesday.
Following the release of the minutes, the odds that policymakers will raise the benchmark overnight lending rate by another quarter point, to 5.25%-5.50%, at their next meeting on July 26 rose even closer to a sure thing, according to the CME FedWatch Tool.
As of Wednesday afternoon, interest rate speculators estimated an 88.7% chance of a Fed hike in July, up from 81.8% a week earlier. The percentage of people betting on rates staying the same dropped from 18.2% to 11.3%.
Nearly three quarters of interest rate traders, or 73.2%, now expect the fed funds rate to be between 5.25% and 5.50% at the end of the September 20 meeting, up from 69.1% last week.
