Federal Reserve officials meeting in July split over the timing of future interest-rate increases as they struggled to understand why inflation has been so weak in recent months. But they agreed to soon begin the yearslong process of drawing down the central bank’s holdings, according to minutes of the July 25-26 meeting released Wednesday after the customary three-week lag.
Sagging inflation led some officials to suggest holding off on raising rates again for now, arguing the Fed “could afford to be patient under current circumstances.”
Others, however, worried that the strong labor market and high stock prices could produce a spurt of inflation above the central bank’s 2% target that could be difficult to control. This group cautioned that waiting too long to raise rates “could result in an overshooting of the [Fed’s] inflation objective that would likely be costly to reverse,” the minutes said.
PG View: I find it amusing that the Fed continues to be worried about an overshoot on inflation.