A 'few' Fed officials said there was a case for a rate hike in June, minutes from Warsh's first meeting show

By Greg Robb

Federal Reserve Chair Kevin Warsh speaks to reporters during his first news conference in Washington in June.

A "few" Federal Reserve officials said there was a case for raising interest rates in June, according to minutes released Wednesday from the central bank's meeting last month.

Support for a rate hike last month hadn't been known previously. At the June meeting, Fed officials voted to keep interest rates unchanged. Supporters of rate hikes said that while they saw the case for raising rates, they supported maintaining the current rate target "at this meeting," the minutes showed.

That some officials raised the possibility of a rate hike as soon as June adds to the sense that there is growing support at the Fed for a rate hike this year.

The June meeting was new Fed Chair Kevin Warsh's first in charge of the central bank. The minutes were shorter but not as terse as some economists feared, though some of the description of the discussions seemed truncated.

Economists had said the June meeting was clearly hawkish, with nine Fed officials suggesting in their economic forecasts that they should hike rates this year. Still, many Fed officials believed they could hold policy steady. This was basically a description of the Fed's "dot-plot" forecast released after the meeting.

The next Fed meeting will be on July 28-29.

Markets now see roughly a 75% chance of a rate hike this year, according to Atlanta Fed data.

Inflation has risen to a 4.1% annual rate, well above the Fed's 2% target. Price increases have now been above that target for six years, and Fed officials are clearly concerned.

"The majority of participants highlighted the possibility that, after several years of inflation above 2%, continued elevated inflation rates could begin to affect inflation expectations and wage- and price-setting decisions," the minutes said.

Many officials thought elevated commodity prices and supply disruptions could persist longer than anticipated. They pointed out that strong demand for AI infrastructure would likely sustain upward pressure on prices for technology products and electricity.

"Several" Fed officials said they did not think the current level of interest rates was putting downward pressure on inflation.

In another sign of concern about inflation, Fed staff said their inflation forecast for this year and next was higher than the one prepared for the April meeting.

Core inflation, which has risen above 3%, was forecast by the staff to change little over the rest of the year.

-Greg Robb

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07-08-26 1422ET