Only a small contingent of officials at the Federal Reserve support a US interest rate cut this month, minutes released from the central bank's June meeting showed on Wednesday.
Fed officials are debating the effects that President Donald Trump's tariffs will have on inflation. Most policymakers noted during the June 17-18 meeting that tariffs "could have more persistent effects on inflation", while a few thought it would lead to a one-time increase.
"A couple of participants noted that … they would be open to considering a reduction in the target range for the policy rate as soon as at the next meeting," June's meeting minutes read. At the same time, some officials said they would be open to holding rates steady for the whole year.
Fed officials last month agreed to hold the central bank's interest rate target range at between 4.25 and 4.50 per cent, extending their pause for a fourth straight meeting. The Fed holds its next two-day meeting on July 29-30.
Two top Fed officials – governor Christopher Waller and vice chair for supervision Michelle Bowman – indicated their support for a rate cut this month shortly after the June meeting, with the Mr Waller pointing to his belief that tariffs will have a one-time inflationary effect.
Mr Waller and Ms Bowman are both permanent voting members on the rotating 12-person Federal Open Market Committee.
However, those views are at odds with the broader rate-setting FOMC, including Fed chairman Jerome Powell, who has gone for a more cautious approach towards cutting rates.
The June minutes reflected Mr Powell's more cautious posture.
"Participants agreed that although uncertainty about inflation and the economic outlook had decreased, it remained appropriate to take a careful approach in adjusting monetary policy," they read.
Employment data released last week further evaporated the chances of a rate cut this month. Data released by the Labour Department showed the economy topped expectations by adding 147,000 jobs in June while the unemployment rate unexpectedly fell from 4.2 per cent to 4.1 per cent.
Traders have now priced in the odds of a July rate cut at just 6.7 per cent while also reducing expectations of a cut in September, data from the CME Group showed.
Still, minutes from the June meeting showed "most participants" expect to cut rates at some point this year. Projections released alongside their rates decision showed most Fed officials anticipate two rate cuts in 2025, in line with market expectations.
The Fed's cautious stance has drawn the ire of Mr Trump, who in recent weeks has increased tension with the central bank and Mr Powell.
Mr Trump earlier on Wednesday said the current Fed rate should be "at least" three points lower, to reduce the cost of servicing the country's debt.
Other members of the Trump administration have also begun criticising Mr Powell as speculation increases over who might be his successor. Among his critics is Treasury Secretary Scott Bessent, who has lashed out at the Fed chair, a step that his predecessors have typically avoided.
Mr Trump had previously toyed with the idea of firing Mr Powell, although a recent ruling from the Supreme Court granted Federal Reserve officials protection from the President.
On Tuesday, he repeated his call for Mr Powell's resignation and gave Congress his approval to investigate him over accusations among Republicans that he had misled politicians about renovations at the Fed's headquarters in Washington.
Mr Powell has maintained that he will serve out his term as Fed chairman, which expires in May 2026. He has not said if he will remain on the board for his duration as Fed governor, which expires in 2028.
