Fed Minutes: Despite Encouraging July CPI, Inflation Remains Far Too High

It’s not time for a victory lap just yet, even after markets have rallied substantially since their June lows, and an encouraging July CPI print pushed them higher.

This week, the Fed released the minutes from its most recent policy meeting in late July. Fed officials, according to the minutes, think inflation remains too high, and are committed to raising rates. They’re almost certain to raise rates again when they meet next month.

Fed officials also saw trouble coming in housing. They said housing activity had “weakened notably,” in large part because of higher mortgage rates. Meeting participants “anticipated that this slowdown in housing activity would continue.” Many have predicted that the Fed’s efforts to slow inflation would crash housing prices, after a big run-up during the pandemic. And a housing bust might force the Fed to stop raising rates, perhaps before it was able to tame inflation.

In June, the central bank raised its benchmark interest rate three-quarters of a percentage point, the largest increase since 1994. They followed that up with another, equally large rate increase last month. It is widely expected that the Fed will raise rates again when officials meet next on Sept. 20-21. The question is by how much.

“Participants concurre...
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