Fed officials weigh rate hikes as inflation runs hot at 4.1%

The Federal Reserve held rates steady at its June meeting. Not everyone was happy about that.

Minutes from the June 16-17 FOMC meeting, released on July 8, revealed a meaningful faction of policymakers who wanted to raise interest rates immediately, citing persistent inflation that has stubbornly refused to behave. The committee ultimately voted unanimously to keep the federal funds rate in its current range of 3.5% to 3.75%, but unanimous votes can hide a lot of internal disagreement, and this one did.

The inflation number driving all this anxiety: PCE price inflation came in at an estimated 4.1% in May 2026. The Fed’s target is 2%.

A new chair, an old problem

New Fed Chair Kevin Warsh presided over the June meeting. The inflation pressures cited in the minutes aren’t coming from a single source. AI-driven capital investment, geopolitical tensions linked to Iran, tariffs, and surging energy prices were all flagged as contributing factors.