Fed maintains tough tone and sees persistent inflation, FOMC minutes show.

THE Federal Reserve (Fed) The government maintained a cautious stance regarding inflation and signaled that further increases in the benchmark interest rate remain on the radar, according to the meeting minutes. of the Federal Open Market Committee (FOMC)The minutes of the meeting, held between June 16 and 17 and released this Wednesday (8), show that policymakers consider inflationary pressures to remain high, while the economy and labor market continue to be resilient. At the meeting, the committee decided to maintain the interest rate in the range between 3.50% and 3.75% per year, assessing that economic activity continues at a solid pace and that the labor market remains stable, despite the environment of high uncertainty. According to the minutes, inflation continues above the central bank's 2% target, driven by the effects of trade tariffs, higher energy and input costs resulting from the conflict in the Middle East, and the strong investment cycle in artificial intelligence (AI). The Fed also highlighted that some of the price pressures have become more widespread across goods and services, increasing the risk of more persistent inflation. Policymakers observed that medium- and long-term inflation expectations remain relatively anchored, but stressed the importance of preventing a prolonged period of above-target inflation from altering consumer and business behavior in price and wage formation. Regarding the labor market, members assessed that unemployment remains close to the long-term level and that the pace of job creation continues to be consistent with labor force growth. Furthermore, they highlighted that wages have ceased to represent a significant source of inflationary pressure. While acknowledging that economic activity continues to be supported by household consumption and investments in artificial intelligence infrastructure, policymakers warned that there is still significant uncertainty regarding the impacts of the conflict in the Middle East and the evolution of inflationary pressures. Although all members voted to maintain interest rates at this meeting, the minutes show that some policymakers argued there were grounds for an increase as early as June. Most participants stated that if inflation remains high and the labor market continues to be strong, further monetary tightening may be necessary in the coming months. On the other hand, some members believe that if price pressures decrease as expected, there will be room to maintain or reduce interest rates in the future. The minutes also revealed that the Fed intends to revise its communication strategy. Officials supported simplifying the statement released after the meetings and removing language that suggested a bias toward monetary easing, reinforcing the message of commitment to price stability.

This text was translated by machine from Brazilian Portuguese.