Minutes from the June 2026 FOMC meeting showed Fed officials were divided over the future path of interest rates and considered a wide range of possible outcomes for the economy and monetary policy. Participants generally judged that upside risks to inflation remained elevated, and a few remarked that, given these risks, there was a justification for raising rates.
Many participants highlighted scenarios in which, even with a stable labor market, inflation would stay elevated due to robust AI-related demand, the conflict in the Middle East, or the impact of tariffs. In such cases, nearly all of these officials indicated that additional policy tightening would likely be needed to bring inflation back to the 2% target.
However, under what they viewed as the most likely economic outlook, many officials expected interest rates to finish the year at or slightly below their current level. In June, the Fed left the federal funds rate unchanged at 3.50%–3.75%, as widely expected.
