Fed Minutes Show More Officials Warned of Rate-Hike Scenario

• Many Fed officials preferred removing the 'easing bias' from the post-meeting statement, indicating a more hawkish stance.
• A majority of participants saw a rate hike as likely if inflation continued to run persistently above the 2% target.
• Concerns were raised about high energy prices due to the Middle East conflict contributing to inflation and potentially becoming unmoored.
• Discussions included financial stability risks, specifically potential losses in private credit and unwinding of hedge fund leverage in the Treasury market.

The Federal Reserve's latest meeting minutes reveal a hawkish shift among officials, with many preferring to remove the 'easing bias' from their statement. A majority expressed concern about persistent inflation, driven by high energy prices and potential supply chain issues from the Middle East conflict, suggesting a rate hike could be warranted if inflation remains above the 2% target. There were also concerns about financial stability risks in private credit and the Treasury market.