Divided Fed worried about tariffs, inflation and the labor market, minutes show

Inflation & Employment - The Fed minutes indicate a divided open market committee regarding the greater risk between upside risk to inflation and downside risk to employment [1][2] - A majority of participants judged the upside risk to inflation as the greater of the two risks [1] - Several participants viewed the two risks as roughly balanced, while a couple considered downside risk to employment the more salient risk [2] - Inflation is somewhat above the 2% goal, and the unemployment rate remains low, with employment at or near estimates of maximum employment [3] - The Fed expects inflation to increase in the near term, with tariff effects becoming more apparent [4] Economic Outlook - Uncertainty about the economic outlook remains elevated, and some participants mentioned indicators suggesting a softening in labor demand [3] - Growth of economic activity slowed in the first half of the year, and several participants expect growth to remain slow for the second half [6] - 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] Tariffs - Evidence suggests that domestic businesses and consumers are predominantly bearing the tariff costs [5][6] - A few participants noted that tariff-related factors could lead to stubbornly elevated inflation [5]