Fed officials see rate hike ahead if inflation stays elevated, minutes show

U.S. Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C., the United States, on April 29, 2026. Li Rui | Xinhua News Agency | A majority of Federal Reserve officials at their most recent meeting anticipated that interest rate increases would be necessary if the Iran war continued to aggravate inflation, according to minutes released Wednesday. Though the rate-setting Federal Open Market Committee again voted to keep its benchmark rate targeted between 3.5%-3.75%, the meeting featured four "no" votes, the most since 1992, and an apparently heightened level of disagreement about where policy should go. At issue was the impact that the Iran war would have on prices and how that would work its way into monetary policy. Officials differed on how long the war's impact would last and whether the post-meeting statement should continue to reflect a bias toward cutting rates as the more likely next move. While several meeting participants said it would be appropriate to lower when it's clear that inflation is moving back to the Fed's 2% or when the labor market weakens, "A majority of participants highlighted, however, that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2 percent." Three of the four "no" votes came from regional presidents who advocated policymakers keep their options open for increases amid an inflation surge. …