Fed minutes show participants noted risks to inflation and employment

Inflation & Employment - The Fed minutes from the July meeting indicate a somewhat divided open market committee [1][2] - A majority of participants judged the upside risk to inflation as the greater of the two risks, while several viewed the two risks (inflation vs jobs) as roughly balanced [2] - A couple of participants considered downside risk to employment to be the more salient risk [2] - The Fed expects inflation to increase in the near term, with tariff effects becoming more apparent [4] - A few participants noted that tariff-related factors could lead to stubbornly elevated inflation [5] Economic Outlook - Participants observed that growth of economic activity slowed in the first half of the year, and several expect growth to remain slow for the second half [6] - Uncertainty about the economic outlook remains elevated [3] - Some participants mentioned indicators could suggest a softening in labor demand [3] Key Factors - A decline in immigration is lowering both actual and potential output growth [6] - Increased use of AI in the workplace may lower employment going forward [6] - Evidence suggests that domestic businesses and consumers are predominantly bearing the tariff costs [5]