FOMC minutes show a Fed growing restless on inflation as Warsh floats six-meeting FOMC schedule for 2027

• Several FOMC members noted inflation was 'broad based' across goods and services categories, with underlying inflation appearing elevated even after excluding tariff and energy-affected items
• Three members (Hammack, Kashkari, and Logan) dissented in favor of raising rates, with some participants warning that financial conditions might not be sufficiently restrictive to return inflation to 2%
• Gold prices rose 3.24% to $4,474.88 following the release, as Warsh's proposal for six meetings per year (versus current eight) would allow more time between policy decisions

Summary

Key Developments:

The July 28-29 FOMC minutes revealed growing concern among Federal Reserve members about persistent inflation, with price pressures remaining elevated even when excluding transitory factors like tariffs and energy prices. The committee voted to hold rates steady, though three members (Hammack, Kashkari, and Logan) dissented in favor of a 25-basis-point hike.

Economic Outlook:

• Staff projections show inflation expected to decline in H2 2026 as tariff and Middle East conflict effects wane, reaching approximately 2% by 2028
• Real GDP growth projected to slightly outpace potential, supported by financial conditions and AI-related investment
• Labor market conditions remain stable with unemployment near long-run estimates
• Risks to inflation forecast skewed to the upside; employment and GDP risks tilted to the downside

Policy Considerations:

Many FOMC members indicated policy tightening may be necessary if inflation doesn't decline. Some participants suggested current financial conditions might not be restrictive enough to return inflation to the 2% target. A few members favored immediate rate increases to prevent steeper tightening later.

Structural Changes:

Fed Chair Kevin Warsh proposed reducing FOMC meetings from eight to six annually beginning in 2027, allowing more time between meetings for data accumulation and strategic policy consideration. No decisions were made on this proposal.

Market Impact:

Following the 2 PM ET release, spot gold continued consolidating earlier gains, trading at $4,474.88, up 3.24% on the session, reflecting ongoing uncertainty about the Fed's inflation fight.