Minutes Show Several Fed Members Flagged Inflation Risk

Inflation & Monetary Policy - The majority of the Federal Reserve saw inflation risk outweighing employment risk [1] - Several members flagged the risk of inflation expectations becoming unanchored [1] - Some Fed members suggested the current rate may not be far above neutral [1] - The Fed was already seeing some issues with inflation growing at the end of July [3] - The minutes offer support for the idea that the majority on the Fed isn't going to move if a weak employment report is released unless it's very weak [4] Tariffs Impact - Many noted the full effect of tariffs could take some time [4] - Fed economists were looking for about six months to see the pass-through effects of tariffs, say the end of the third quarter, the beginning of the fourth quarter this year [6] - The Trump administration's on-and-off approach to tariffs complicates the timeline [6] - Companies brought in imports early to build inventories, which are now being run down, leading to expected price increases [7][8] - Home Depot indicated they would have to start raising prices [8] Labor Market & Economic Outlook - The official subject of the Jackson Hole Economic Symposium is labor markets in transition [20] - The Fed looks at the unemployment rate as a proxy for US growth [22] - The Fed will likely look to the August payrolls report and its impact on the unemployment rate [22] Fed Independence & Political Pressure - Allegations against Federal Reserve Governor Lisa Cook have emerged, with calls for her resignation [10][11] - Removing Lisa Cook wouldn't significantly impact the president's goal of lowering interest rates, but it would allow him to appoint someone more sympathetic to low rates [13] - There are concerns about the Trump administration's efforts to influence public opinion and potentially weaponize the government against Democrats [11][16] - The Fed is independent, at least in terms of the way it acts, and is biased only towards what the economy is telling them to do [26][27]